VAT Refunds in Saudi Arabia may be applied on a quarterly basis in a calendar year, with a final single annual claim by June 30th of the following year. The minimum claim amount for Saudi Arabian refunds is Riyals 1,000.
Now, VAT return filing involves a set of activities by the taxpayer, who collects VAT on behalf of the GAZT (General Authority of Zakat and Tax) and has the right to claim back VAT paid on his taxable purchases.
Let’s see the details a taxpayer needs to provide for VAT return filing. The description of VAT invoicing on goods/ services are as under:
- Invoices do not need to be submitted in support of refund, but can be requested subsequently
- Foreign businesses which are VAT/ GST registered in their own countries may apply for annual VAT refunds
- Approved refunds will be paid within 60 days
- Tourist VAT refund will be provided for by authorised organisation(s)
Now, for a seamless VAT reclaim, a taxpayer needs to follow compliance and the following details are required in a VAT claim:
- Invoice dates
- Invoice numbers
- Name of Tax ID number
- Total invoice amount
The above descriptions are for domestic KSA (Kingdom of Saudi Arabia) companies to recover VAT in their local VAT declaration. Even though the legislation has the option for non KSA entities to recover VAT, the system has not been introduced yet. Ideally, non-KSA residents who make VAT-eligible sales and purchases in the Kingdom are required to register and pay for VAT, however, no refunds are possible to these foreign businesses that incurred VAT in KSA at present. In all likeliness it means that once UAE offers refund to foreign businesses in relation to VAT incurred in the year 2018, they presumably won’t grant refunds to businesses from KSA because of reciprocity.
What does this mean for you?
As per the KSA VAT manual of 2017, in order to register for VAT, non-resident businesses will have to appoint a tax representative based in KSA. That representative, once approved by GAZT (The General Authority of Zakat and Tax), is able to submit VAT returns and payment to GAZT and correspond with the Authority on the taxpayer’s behalf. The representative will be held jointly and severally liable for the VAT the business owes to GAZT. That means that if the business fails to pay tax for an extended period of time, the tax representative can be held personally responsible for the remaining balance. This will apply only once the system has been introduced for the non-KSA entities.