The Zakat, Tax and Customs Authority (ZTA) will start applying the new mechanism for the accrual of value-added tax (VAT) for establishments contracting with government entities on Monday, following the recent decision of the Authority's Board of Directors to approve the amendment of the provisions of Article (Twentieth) of the VAT Executive Regulations, related to determining the date of supply and accrual of tax in specific cases.

The amendment to the regulation includes changing the date of supply and accrual of VAT on all supplies of goods or services made by enterprises contracted with government agencies in accordance with contracts concluded with those agencies, in accordance with the Government Tenders and Procurement Law.

The Authority stated that the due date of the tax will be the date of issuing the payment order for the claim related to the taxable supplies, according to the procedures of the Tenders System or the date of receiving the supply or part of it, whichever is earlier, to ensure that the establishment receives the tax due for the supply before declaring it and paying it to the Authority within its periodic declarations.

The Zakat, Tax and Customs Authority has recently launched a simplified guide to amend the tax treatment of supplies made by enterprises for the benefit of a government entity in accordance with the Government Tenders and Procurement System, which includes the definition of the decision and the categories subject to it with a simple explanation of the new mechanism, in addition to the tax return form for companies according to the new amendment, as well as the fines and the scope of application.