VAT Submission in Saudi Arabia

Has tax season ever left you feeling a little lost? It is not just you! It can be confusing when dealing with the VAT Submission in Saudi Arabia, especially if you are unfamiliar with the country. Reyson Badger can assist you with the submission and filing requirements in KSA, allowing you to concentrate on your business.

What is VAT?

VAT can be thought of as a small fee that is added to most goods and services that you purchase. Saudi Arabia has a standard VAT rate of 5%. In other words, if you purchase a shirt for 100 Riyals (SAR), you will actually pay 105 Riyals (100 SAR + 5 SAR VAT).

VAT Submission

Your VAT submission should be viewed as a report card on your VAT activities. It shows the GAZT:

• The total amount of VAT you collected on sales.
• The total amount of VAT you paid on your own purchases.
• The difference between these two amounts (this is what you might owe the government or get refunded).

Who is Accountable for VAT submission?

Businesses that generate more than a certain amount of revenue in a year are required to register for VAT and file returns. Currently, this amount equates to 40 million Saudi Riyals.

• Monthly Filers: Companies with annual revenue exceeding 40 million Saudi Riyals must file VAT returns on a monthly basis.
• Quarterly Filers: Businesses making less than 40 million SAR per year are required to file VAT returns every quarter (3 months).

How to File VAT Submission?

Fortunately, submission takes place online! In order to submit your VAT returns, you can use the handy portal provided by the General Authority of Zakat and Tax (GAZT). In order to register for an account, you will need to keep an accurate record of your sales and purchases with VAT details.

Paying Taxes

The final tax bill must be paid within 120 days of the end of the financial year.

In addition, three equal amounts of tax must be paid in advance. These are paid on the last day of the sixth, ninth, and 12th months of each calendar year. Each of these advance payments is 25% of what was owed in taxes last year, minus any tax already taken from the income. Those owing less than SAR 500,000 are not required to make these advance payments. Late payments will incur a penalty.

Checking Taxes

ZATCA does not have a specific method for checking taxes. However, they usually select companies for inspection based on the size and ownership of the company. They have also developed something called a "risk engine" to assist them in selecting which companies to examine, but it has not yet been tested.

Time Limits

Tax bills can be changed by ZATCA within five years of the deadline for submitting tax information. In the event that someone has not provided their tax information or it is inaccurate as a result of avoiding taxes, ZATCA is able to correct it within ten years.

Reclaiming Money

A taxpayer who paid too much tax may request a refund within five years of the end of the tax year.

ZATCA's Focus

ZATCA examines a company's records to determine if the amount it pays its employees matches what it reports in its records. Also, they examine payments made to individuals who do not reside in Saudi Arabia to ensure the correct amount of tax has been collected. In order to verify whether companies reported the correct amount of imports, they obtain information from the Customs Authority.

If you have any queries regarding VAT Submission in Saudi Arabia, feel free to get in touch with Reyson Badger.