Last week, the new VAT increase began to apply after the amendment approved by the General Authority for Zakat and Income to become 15% instead of 5%, and Zakat and Income Authority spokesman Hamoud Al-Harbi revealed the goods that are excluded from applying the 15% VAT, indicating that the excluded goods and services according to the local system include: Residential leasing and some financial services that are based on implicit profit margins.
Exclusion of certain goods
He explained that some goods and services have also been excluded, such as international transportation, whether within or outside the GCC, some medicines and medical supplies according to a list issued by the Food and Drug Authority, as well as exporting outside the Kingdom, adding that there is cooperation between the Authority and the Ministry of Commerce to prevent any manipulation of VAT application by traders.
There is cooperation between the Authority and the Ministry of Commerce to prevent any manipulation of VAT application by traders.
<p class="wp11 goods and services exempted from tax application
Reports revealed 11 goods and services that are exempt from the application of VAT, as medicines and medical equipment specified by the Ministry of Health and the General Food Authority came at the top of these goods and services exempt from the tax, as well as the supply of gold, silver and platinum for investment purposes is exempt from the tax, and the supply of qualified transportation and related services is exempt from VAT.
Reports revealed that 11 goods and services are exempt from VAT application.
The list of exempted goods and services includes: Services supplied to non-GCC residents, exports to non-GCC countries, issuance and renewal of driver's licenses, rental of residential properties, international transportation of goods and services, sale of personal residential property, current, savings and deposit accounts, and finally issuance and renewal of passports.
The list of exempted goods and services includes.
Sale of residential property from tax
While the General Authority for Zakat and Income clarified that the sale of residential property used by the owner or relatives to a relative up to the fourth degree is not subject to VAT.
In real estate leases, GAZT clarified that if the contract is entered into between two taxable persons before May 11, 2020, the supplier can charge VAT at 5% until the end date of the contract or its renewal or June 30, 2021, whichever is earlier.
The General Authority for Zakat and Income Tax (GAZT) clarified that the sale of a residential property used by the owner or a fourth-degree relative is not subject to VAT.
"Customs" clarifies imported goods tax
For its part, the Saudi Customs Authority clarified the controls for applying the new VAT increase on goods imported from abroad, which will be implemented starting from July 1, and explained that "tax invoices issued by a taxable person, registered with the Authority before May 11, 2020, and loaded with 5% tax rate; the new 15% rate is not applied to them, provided the actual supply is made before the end of June 30."
Methods of dealing with tax invoices
The General Authority of Zakat and Income clarified how to deal with tax invoices issued before and after the increase in the VAT rate to 15%:
If the tax invoice was issued before May 11, 2020, and the supply related to the invoice is made on or after July 1, 2020, the tax at 5% applies to that supply, provided that the supply is actually made before the end of June 30, 2021.
Tax invoice from May 11, 2020 to June 30, 2020
If the tax invoice is issued from May 11, 2020, through June 30, 2020.
5% tax applies if the supply is actually made before the end of June 30, 2020
Tax at 15% applies if the actual supply is made on or after July 1, 2020.
Tax at 15% applies if the actual supply is made on or after July 1, 2020.
