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VAT Queries received from 29 Dec 2017- 2nd January 2018 and opinion from VAT Consultants

City
Name
Query Heading
Question
Consultants Opinion
Jeddah
Amjad
Offshore Services
I am professional service provider in KSA, I provided services to a person based in UK while on visit to UK. Will it be Taxed in KSA?
Assuming that the Invoice is raised from KSA to UK and all conditions specified for exportation are met then such supply would be Zero Rated.
Jeddah
Vijay
Private Education Services to Saudi Citizen
Whether Private Education Services are subject to VAT to Saudi Citizens?
All Private Education services are subject to 5% VAT in KSA. Saudi Citizens will be issued Tax Invoice without VAT (National Identity information must be included in Tax Invoice in such case) where as non-Saudi will be subject to 5% VAT. Similar relaxation are provided for healthcare services to Saudi Nationals.
Riyadh
Azzam Khaled
Internal Auditor role
What's the role of internal auditor (CAE) regarding application of VAT in his company?
Internal Auditors are safe guards of the organization, who can sense and project possible business risk. Non compliance to VAT regime is not only a financial risk but also business risk to the company. Hence he has very important role in making assure that all business systems, processes, operations, functions and activities within the organization are being continuously evaluated, trained and updated regularly. Internal Audit has a major role to play in the safety assurance of the organization.
AlKhobar
Mohamed Mokhtar
Import of Services
"I need to understand VAT Impace on the following services Import:
1-Design consultancy services provided by a consultant based in GCC country other than KSA, is it applicable to VAT?
2-Design consultancy services provided by a consultant based in a country other than GCC is it applicable to VAT?
3- How my company can compensate the VAT tax from DZIT (we are now in pre-operation stage- No revenue or sales). Thanks"
"1. Subject to RCM until the unified intra connectivity is in place.
2. Subject to RCM
3. VAT paid before taking registration can be claimed for Services received and Capital Goods. Please refer Article 49 of the Regulation."
Jeddah
Mohamed Emam
VAT Training
Is there a training for VAT .?
Yes, VAT, IFRS updates workshop will be held on the third week of January 2018.
Riyadh
Bashar Nayef Alshamekh
Deferred Revenue
In case you booked deferred revenue, you will consider the tax as a deferred tax also and amortize the deferred revenue and tax on monthly basis. Do you agree with me.
It's not how you are treating the revenue in books of accounts. Revenue received has to be based on an invoice (Advance Invoice or Supply based Invoice), hence VAT is applied. To be specific on Advances, VAT is applicable on receipt and has to be paid to GAZT while filling tax return for the period.
Riyadh
ZAKARIYA BILADI
Invoice Format
Vat invoice format required
https://www.vat.gov.sa/en/news-media/press-releases/gazt-outlines-requirements-for-vat-invoices
Riyadh
Johnnygene Padillo
Holding Company expenses allocation
I am working with a holding company and we have 4 affiliates. As a parent company, we have some allocations charge to the affiliates. Should it be better to treat these costs as transfer costs rather than allocated costs which we have to invoice in each affiliates?
"If it’s a Group VAT registration for all the affiliates, the intra group cost transfer is not subject to VAT.
If each affiliate is having different VAT Registrations, those charging's may constitute as a revenue for the holding company. Hence VAT applies.
"
Riyadh
Johnnygene Padillo
Services from unregistered nationals
In our company we have nationals who serve as consultant on professional fees basis. They don't have an established company and act as individual. In this case, who will bear the input VAT of paid amount to them?
"1. If the consultant is not VAT Registered, then, no VAT can be charged by the consultant. If incase consultant is VAT registered, input credit can be claimed by the company.
2. But, in case of NON - Saudi consultant, Import of Services would apply and as per A - 41 of the Agreement. VAT to be paid and Credit can be availed if these services are connected with taxable supplies from the busines."
Riyadh
Carlo Rhay Eseo
Recurring Entries
We are posting recurring entries every month, how this could effect our VAT payable?
VAT need to be charged on supplies made/received. If it is regarding accounting provision entries, you need to see weather it is a deemed supply or simply an adjustment entry. Incase of deemed supplies, VAT liability accrues.
Riyadh
Hossameldeen owaise
VAT Training
VAT in KSA
Yes, VAT and IFRS updates workshop will be held on the third week of January 2018.
Jeddah
Tamer Melegy
VAT Invoice content
"1) What if supplier invoice without VAT information?
2) While making client invoice, VAT must be applied to each line/product or in total is enough?"
"1) We must have a VAT compliant Invoice to claim the Input Credit. Please refer below link for Invoice requirements:
2) It is suggested to have VAT applied rate and amount at each line, if supplies are of different nature/rates. refer below link for more info:
https://www.vat.gov.sa/en/news-media/press-releases/gazt-outlines-requirements-for-vat-invoices
"
Dammam
Mohammed Shahid
Unregistered suppliers
For unregistered supplier and customers, how to pay and collect vat.
"Its illegal to raise VAT invoices by an unregistered supplier. Heavy penalties may be imposed.
All revenue(Taxable supplies) are subject to VAT output liability for a VAT registered entity.
"
Jeddah
Haytham Dawoud
Long term contracts
We are construction company and our invoice type is particular, we have continued contacts from past years or since 2017 , and the invoices items are including gross amount, and amount after the deduction of down payment and then deduct the retention to reach to collectable amount, my question is the vatable principle amount will be the gross amount or the amount after the advances deduction or the amount after retention deduction Kindly clarify , and also what we should to do with remaining balance of the advances amount
"If the contract agreement is dated before May 2017 and transition provision conditions are also met, The invoices to the tax registered customers can be Zero rated in the year 2018.VAT will be applied from 2019 onwards. (Refer Article 79(3)) for more details.
VAT should be charged on Gross Invoice Value. Adjustment of advance and retention is payment application part(No VAT Impact). "
Jeddah
Mansoor Ahmed Dewanjee
Warehousing at port.
Warehouse & Open Yard leasing for storage/stocking, in Jed Islamic Port, is rent vatable? Given that it is technically not within KSA territory, as this is before custom clearance area.
Area within 12 .nautical miles from surface is defined as the part of KSA territory. VAT will be applied unless it is exempted specifically.
Jeddah
Mohammed Shafi
Travel Agents
We are a travel agency and how is VAT applicable on us, is it on service fees or total value ?
"VAT is place of supply based taxation system, International travel fares are Zero rated but Domestic travel as well as agent service charges will be subject to VAT.
VAT to be charged on the total value of the invoice, except for the International travelling."
Riyadh
Wael Taher
Input Credit claim
What are the expenses that is billed (include VAT) we can credit the VAT amount paid in those bill in our account? Means to get this VAT back or deduct from the VAT we should pay? Like (fuel – services like maintenance, cleaning, rent ... etc. – packing materials - stationery – tools and spare parts).
"You should have appropriate VAT invoice to claim Input credit. If that is there you should show ""eligible"" Input tax paid in VAT return.
In short, if your are in business of taxable supplies, All Output Tax deducted by All eligible Input Tax paid is the net liability payable to GAZT. "
qatif
Ali Almohashi
VAT Training
You can visit my blog www.alialmohashi.com. It has a number of infographics and blogs about Saudi VAT. Most of them are in Arabic and English.
Appreciate your efforts, we encourage delegates to visit your webpage.
Riyadh
Syed Ehsan Zafer
NGO
We are a science center and non-profit organization. Is VAT applicable to us?
Vat is applicable if commercial activaties are undertaken by the NGO.
Riyadh
Loutfi
Directors Fee
Are payments made to members of the Board of directors , audit committees and other committees who are residents in Saudi Arabia subject to VAT ?
If they are not employees of the company, otherwise If the receiving party is unregistered to VAT, NO VAT impact.
Riyadh
Abdullah
CMA
As IMA member, how could i help my company in applying VAT?
Being professional members, your knowledge and skill set can help company to adapt correct procedures and accounting. VAT regulation adaption could be easy with your current CMA knowledge which can be further sharpened by taking appropriate trainings. This will assure a shield against possible penalties to the company and give you satisfaction of being an active contributor for the company
Jeddah
Amr Saudi
Un-registered parties
Does a non-registered individual apply VAT to sale of Real Estate Property to a Business buyer?
Un-registered person cannot issue VAT Invoice, hence no VAT, You must register if your annual turnover is greater than SR 375,000/-
Jeddah
Amr Saudi
School Fee
In a school a parent paid registration for school before 30 May 2017, will this be considered as ZERO VAT contract in all subsequent billings after 1/1/2018?
As per current regulations, and in given case, parent is an individual without having VAT registration in his name. He will be charged additional VAT Invoice from School i.e.. 1st Jan. 2018 on applicable school fee (non govt. school).However there are bright chances that some schools might deposit VAT without claiming from parents.
Yanbu
Arunkumar Krishnan
First time VAT
The challenges in the implementation of vat in KSA
KSA VAT is one of the simplest VAT law but high cost of being non-compliant. Indirect Taxes are first time experience to the region and all three pillars are affected party to it (Department/Business/regulators) hence a challenge for while. Continuous education and pro-active approach are need of hour and same is been seen in the region.
AlKhobar
Jineesh
Audit Services
"1. Is it possible to collect output VAT for from the client the audit service of 2017 which is actually executing in 2018 after the closing of financial year 31-12-2017. The auditing fee for the client is actually the expenses related to 2017 and not for 2018 but for the auditing firm this revenue is for 2018. Please clarify?
2. Should we need to pay VAT for the foreign services like importing goods from outside the Kingdom of Saudi Arabia? Or payment for this services only includes Withholding Tax and not VAT?"
"1.If the contract is entered before May 2017 and transition provision conditions are fulfilled, Invoicing to tax registered customers can be Zero rated for the year 2018.
2.Importing goods/services from outside KSA is subject VAT, for goods customs will charge VAT. For services RCM applies along with Withholding Tax."
Dammam
Mostafa Elgendi
Fixed Asset Sale
Sale of fully depreciated Fixed Assets at its nominal market value will be VATABLE, how can we calculate VAT amount if its NBV is zero in company books?
VAT to be charged on the sale amount.
Riyadh
ABDELHAFEEZ WIDAA ELBADRI
Monthly/Annual
Is the VAT to be paid monthly or annually and what kind of documents will be required to prove the amount
VAT return to be submitted monthly/quarterly as per the GAZT advise(Turnover below SR 40m are eligible for quarterly returns). VAT return to be submitted online . All the supporting documents to be kept available with the company for possible audit unto 6 years from the relevant Tax Period. For Capital Assets: it's for atleast for the adjustment period and 5 years post adjustment period...please refer Article 66 of the Regulation.
BURAYDAH
AYMAN
Economic Activity
I ASK FOR (VAT)INPUTS MUST BE RELATED WITH OPERATION TO CALCULATED IT
All the input tax claimed should be directly related to the economic activity of the business operation.

Amjad
Joint Venture
Hi,How we can implement VAT for our Joint Venture Projects, which party will be responsible for VAT
Party raising the Invoice shall be liable to pay VAT provisions.
Jeddah
Abdullah Mustafa
VAT Exclusion
Which kind of the expenses exclude from the VAT
All the input tax claimed based on that period's expenses should be directly related to the economic activity of the business operation. Entertainment expenses, restricted vehicles, Catering and Personal nature expenses etc. are not eligible for input credit.
Jeddah
Wejdan
Delayed Invoicing
We receive the service from vendor on December 2017 but didn’t receive the invoice yet we will pay the VAT for this invoice or not ?!
As supply took place prior to 1st January 2018, delayed invoicing will not have VAT impact.
Riyadh
ahmed labah
Polyclinic
whats the services 0% vat for polyclinic
Generally, all services provided by private Polyclinic in KSA are subject to 5% VAT.
Makkah
Mohammad Alqutb
Supplier Invoice
You must register the VAT as stated in the supplier's invoice even if it is mistaken
Supplier's name and the supplier's VAT registered name to be checked and VAT can be accounted for the eligible Input Tax, It is advisable to be in sync with the Supplier
Riyadh
Musthafa Abdullah Nattikallingal
Insurance
VAT accounting for Insurance Broking company how working and vat return submission system
VAT is applicable for all the insurances other than life insurance. VAT return to be submitted online through GAZT website by filling the VAT return form.
Alkhobar
Mohamed Mahmoud
Late Invoice
what can I do When I receive invoice very late after i already submitted my VAT forum?
Have to claim Input based on the Tax Invoices received in hand. If Tax Invoice is received late, include in the subsequent Tax period
jeddah
ahmed hussein sayed
Past Contracts
when the copmany had old contract before vat application , this contracts signed before 30-05-2017 and include supply of materials when the delivery copleted on 2018 is it vat applicables
If the contract is entered before May 2017 and transition provision conditions are fulfilled, Invoicing to tax registered customers can be Zero rated for the year 2018. (Refer Article 79(3) for more details.
jeddah
ahmed hussein sayed
Matching Financial statement
shall i match the total revenues and total purchased that reported in VAT Tax return with the total sales and total cost of goods sold that reported in financial statements
VAT Tax return has to match with your total sales register and total purchase register for the period. It may not match with the financial statements
Jeddah
Ayman Ghubish
Nomical Supply
can we deal with the medical insurance policy for the employees as a nominal supply?
The VAT on the medical insurance provided to its employees is an input tax for the company, hence can be claimed. If the cost is charged from the employees ITC relevant to this portion should not be claimed by the company or it should be considered as Nominal Supply
Hiba khader
Hiba khader
Claims
if we have sub-contractor services from abroad, against our claim; its reimbursed. is it subject to VAT and how can we account for it? at time of payment or when invoice from them received?
Charge VAT on our Invoicing and claim Input credit shown in supplier Invoice. You may eloborate question for further clarification.
Jeddah
Abdullah Al Mallahi
Past Contracts
We have an ongoing project with govt. organization (SWCC TAHLIYA) and this project started in 2017 and will end in 2019. So, we don’t have any agreement with SWCC related to VAT. My question is do we need to amend out contact with government organization? Which I believe is impossible due to the budget allotted by government.
Refer to the Transition Provision under A - 79(3) of the Regulation. If those conditions are fulfilled, you may charge at Zero rate for until year 2018.
Jeddah
Mohamed Hussien Mazen
Advance from customers
How I can Record Advance Payment form customer if we wanna record KSA 5% VAT in this journal ?
Advance received from customer against future supplies is subject to VAT compliances. If you have received an advance of SR 105 against taxable supplies to be made in KSA, You may Credit Advance from customers for SR 100 and VAT Payable account for SR 5 in given example. This accounting entry can be reversed at the time of supply(and Invoice raised for full consideration). You may refer our general note on "Advance from customers" for more examples.

“Disclaimer: The views expressed are matters of opinion based on our understanding of the law and regulations prevailing as of the date of this opinion and our past experience with the tax, regulatory or other authorities as may be applicable. However, there can be no assurance that the tax authorities or regulators may not take a position contrary to our views.

Compiled by : VATAdvisors.biz team
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