A general, based consumption tax in Saudi Arabia is the Value Added Tax (Vat) In Saudi Arabia. This applies to the added value of products and services.

Saudi Arabia manufacturers must charge with taxation to maintain the system.

So that they can compete with suppliers. Which located outside of Saudi Arabia on equal terms on the Saudi Arabia market.

Value Added Tax in Saudi Arabia

So, a business registered in Saudi Arabia

That purchases raw materials for manufacturing a product will pay an more 5% of it.

  1. Also to the selling price.
  2. Then, The seller will collect the 5% and later charge it to the government.
  3. The tax paid to the seller for selling raw materials called output tax.

Value-added tax

  1. In essence, a broad value-added to all business operations.
  2. Including products and services production and delivery.
  3. But, PROTAX-Ksa if the annual turnover.
  4. Threshold of this person is smaller than that of a Member State. 
  5. The person will not impose it on his sales.
  6. Consumer tax, which the end consumer bears.
  7. It’s not a business expense.
  8. Charged as a price percentage.
  9. Meaning that at every level in the manufacturing and distribution cycle.
The actual tax burden is clear. The amount paid to the other taxable people in purchases for the sake of their business.
 
Business operations collected in part by the taxable people.
 
(i.e., VAT-registered companies) from it.
 
Which is collecting through a partial system of payments.
 
The technique provides a neutral tax whatever the number of transactions.
 
The seller is the taxable person who pays the income authorities.
 
But it paid as part of the price by the buyer to the seller. So, it is indirect.

Take the protax-KSA example below with a 10% charged at each level

A bike company buys raw materials for $5.50, including 10% of it.

Once the pieces finished, the assembler buys them for $11.

Including $1. It receives $11, $0.50 to the government from the company.

The government is not paying the whole 1$ as it keeps the part that paid by the company.

To the distributor of the raw materials.

As the company paid the raw materials seller $0.50 of it.

He only paid the government a value-added tax of $0.50 ($1 – $0.50).

(i.e., the incremental PROTAX-KSA).

VAT paid at each stage can calculate by subtracting it.

That has already changed from the VAT at the latest stage of sale/production.

As noted above, the whole PROTAX-KSA will transfer.

To the end customer because customers get refunding for it.

They paid at the prior stages of the sale.

As seen here, the end consumer pays the whole amount paid in previous rounds by other customers.

It can determine by the price of the end consumer by its rate (i.e., $30*10% = $3).

How is it charged?

As noted, While it owed on any transaction as a percentage of the selling price.
 
The taxable person must allow deducting all the tax payable at the previous stage.
 
Thus, double taxation avoided.
 
Only on the added value in each phase of production and distribution paid the tax.
 
As, at each previous stage. The ultimate cost of the product is the total of the added value.
 
The final PROTAX-KSA paid will be the sum of the paid of it at all stages.
 
A number should assign to registered dealers.
 
The charge of it to clients should show in invoices.
 
The customer knows how much he may deduct.
 
If he is a registered merchant.
 
The customer knows how much he paid tax on the end goods.
 
Thus, the correct value-added tax paid in phases.
 
The system manages itself to some extent.

VAT rates  

Rate Type Which goods or service
15% Standard All other services and taxable goods
0%  

Exports of products or services of the council territory. By proof of the movement of products/services beyond council territory.

Supply under the suspension zones of customs duty.

Exports of services included.

The consumer is not living within the jurisdiction of the council.

Or consumption is not within the territory.
International transport services for goods or passengers.

Medical equipment, medicines, and precious metals investment

PROTAX SERVICE

Protax Company provides VAT AND TAX SERVICES to high-income individuals in areas.

It is including banking, investments, and many more.

Whether it is a returning US expatriate or a former foreign citizen/non-resident.

VAT REGISTRATION

1- How to register 

Most enterprises, including partnerships and groups of corporations filing under one number. It can register online.

This allows you to register in it and create an online account. (also referred to as the ‘Government Gateway account’).

This is necessary to send your HM revenue and customs returns (HMRC).

2- Use an agent 

To file its returns and deal with HMRC on your behalf.  You may use an accountant (or agent).

You entitled to register for the account online.  After obtaining your HMRC Number.

(choose the Protax-KSA returns’ option).

3- Get a certificate 

Within 30 working days, longer.  You should receive your registration certificate.

It also sent:

1- Online account for you

2- By post – if you can register an agency or not, online.

4- What you should know about Value Added Tax

Such as details of your turnover, business, and banking information must provide.
 
Your ‘Effective Registration Date’ known as your registration date.
 
Anyone from this date will need to pay to HMRC.
 
You do not have to allow an agent for PROTAX-KSA registration.

Vat Return Filing

Maintaining the financing of firms is essential to run a successful company. Local regulations might be tough to manage for firms that export to or start in Saudi Arabia.
 
The corporate tax, GOSI contributions, CALCULATION OF LEGAL ZAKAT and PROTAX-KSA. 
 
They are payable to the Government depending on the category in which the Company falls.
 
Though, following its introduction of 2018. Enterprises must keep their account records for return files.
 
To complete by the end of a fiscal year.
 
This is not achievable without proper management of their financing departments.
 
Remain accurate and up to date with your accounting and tax records.

Vat Refund Processing

All such individuals in Saudi Arabia do not conduct an economic activity within KSA.
 
It should assess their eligibility and apply for reimbursement by 30 June 2021.
 
As the technique and method are not yet clear.
 
These individuals can contact GAZT to prove their refund eligibility.
 
To determine/confirm their status as ‘qualified person’.
 
To show their eligibility for a Protax-KSA refund.
 
Foreign Governments, International Organizations, Diplomatic, Consular. 
 
Missions should contact GAZT and MOFA.
 
Eligible people may reserve their refund rights.
 
By making a manual request or sending a request to a specified GAZT e-mail address.

Value Added Tax implementation

The GCC of the framework  accepted in February 2017 by Saudi Arabia and on 1st January 2018.
 
It committed to the implementation.
 
The Zakat and Tax General Authority (GAZT).
 
Manages to install, administer, and enforce in Saudi Arabia.
 
The Implementing Regulations extend to regions covered by the KSA.
 
KSA act and define implementation regulations.
 
Provide taxpayers with adequate information. That is to fulfill their demands for compliance.

The implementing rules cover the following: ‎

1- Definitions

2- Taxable Persons

3- Supplies of Goods and services

4- Place of Supply

5- Exempt Supplies

6- Zero-rated Supplies

7- Value of Taxable Supplies

7- Imports

8- Calculation of PROTAX-KSA payable​

9- Procedure and administration

10- Refunds of Tax General provisions

Imports

There is a discount on low-value imports of 10,000 riyals for consumer imports.

Imports of goods for people with special needs are exempt from PROTAX-KSA.

Record keeping

  1. For 6 years, taxpayers should keep records and supporting accounts.
  2. Arabic records must keep.
  3. Electronic records for resident firms in the Kingdom.
  4. Or portals for PROTAX-KSA authorities.
  5. If they are outside the territories, they must keep.
  6. A Saudi tax official obliged
  7. That is to keep non-resident companies’ invoices, books, accounts, and accounts.

Reverse charge 

The customer should be responsible for disclosing output and input in specific cases. That involving non-resident suppliers.

This includes resident electronic markets and portals. When the operator purchases an e-service. To the local customer from a non-resident supplier.

Determining fair market value

The PROTAX-KSA Can re-determine the taxable value.

If the value is below fair market value between related parties.

The consumer has no right to a total allowance.

The delivery should make without regard.

Accounting for VAT in cash 

Suppose a taxable business’s annual sales are less than Riyals 5 million.
 
It may apply to cash-based reporting.
 
Unless the threshold surpassed.
 
A successful applicant must install for the smallest of two years.
 
Cash-based accounting computes it’s owed only on its paid or received.

Cash VAT 

If their yearly sales are below Riyals 5 million.

Taxable companies may request a cash-based VAT report.

A successful application should not surpass the threshold for at least two years.

The accounting based on cash estimates.

It owes on or after payment of VAT.

Regular importers may apply for VAT deferral on imports. 

Pay via a later VAT return.

The VAT Implementing Regulations authorized on H1438/12/4.

Vat Compliance

  1. There is no doubt that the date of supply.
  2. It considered to be the earliest date of invoice.
  3. Date of payment, or date of supply for purposes value.
  4. At the latest, by the 15th of the month after the taxable supply.
  5. Invoices will provide.
  6. In the event of a regular payment installment of the supply.
  7. There is a separate supply for the installment payment.
  8. Or pay for the installment earlier than the date.

Self-Supplies 

Goods or services rendered by a taxable company are not considering for the purposes.

Goods or services offered by another member of the same group to the members are beyond the scope.

Vouchers 

Vouchers for the redemption of a taxable supply are not deeming a taxable event.

The redemption value is equal to the face value.

Value Added Tax Training in Saudi Arabia

  1. Our Value-added WITHHOLDING TAX in Saudi Arabia. Courses offer an overview of its system.
  2. It includes its basic concepts: regulation and Administration
  3. Guidelines for interpreting and applying GCC law.
  4. Our worldwide network of its specialists.
  5. It provides insight into the business.
  6. Practical realities of dealing with it.
  7. This by providing their expertise and practical expertise.
  8. It draws from working in top organizations.
  9. In many countries with established systems.
  10. These courses enable you.
  11. Also your staff to work.
  12. With it to know-how, expertise, and trust.

These are the best compliant software for making digital taxes

Xero – Cost-effective, cloud-based accounting.

QuickBooks – Powerful reporting and profitability management tools.

Sage Business Cloud Accounting

Accounting on the go for a comprehensive solution.

Wave — Designed for freelancers.

Quick File – smart and simple accounting.

Vat Bookkeeping to Value Added Tax in Saudi Arabia.

  1. Value Added Tax in Saudi Arabia – short for Value Added. levied on the value-added of goods and services.
  2. Value Added in many countries known as Goods and Services Tax.
  3. We are happy to recommend.
  4. Support any reputable software that works for you.
  5. With PROTAX-KSA, you need to ensure that any computer system used in your business backed up daily.
  6. We recommend that you install a backup system that backs up your entire hard drive.
  7. This prevents your work from failing when your computer crashes.
  8. It becomes damaged or stolen. You may lose laptops.
 The choice of  Vat bookkeeping and accounting software. It depends on the number of transactions. The complexity of the business and the periods. During which you need accounting information.