Money transfer charges will increase from Jan. 1 as 5% Value Added Tax (VAT) will be levied on money transfer fees, according to the General Authority of Zakat and Tax (GAZT), which is responsible for managing the implementation, administration and enforcement of VAT in Saudi Arabia in close coordination with other relevant entities.
The 5% VAT will be on the money transfer fee and not on the transfer amount, GAZT clarified, adding that VAT will be paid by the person sending the money.
However, many financial services will be exempt from VAT. These include several transactions and services such as interest on loans and lending fees charged with an implicit margin such as loans, credit cards, mortgages, financial leasing, transactions involving money and securities, as well as current, deposit and savings accounts.
