Saudi Arabia Will Implement VAT on January 1, 2018-Cost of Living Will Increase by 5%

Saudi Arabia will implement Value-Added Tax (VAT) from Jan. 1, 2018.  All business establishments with annual sale of SR375,000 will come under this law.

The VAT law is based on the principles agreed in the Unified GCC Agreement for Value-Added Tax (VAT)

However, education, healthcare, real estate and local transport is left to the discretion of each member state (i.e. whether these sectors are subject to tax at the standard rate, zero rates or are exempt).

According to VAT Law when a manufacturer, service provider or a retailer writes a bill it adds 5 percent to the original amount and if the amount is billed to an end-user then the story ends there.

But if for example, a service or good is sold to a company which is not an end-user and uses the good for further sale to the end-user then it too will add 5 percent to the invoice. The business establishments that paid VAT but are not end-users will get back the 5 percent VAT from GAZT.

VAT will be the second in line tax on all people in the Kingdom this year. The GAZT first imposed the selective tax on cigarettes, energy drinks and soda drinks. It also increased visit visa fee, exit re-entry fee and dependent fee for expatriates.

#Saudi Gazette

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