VAT Overview

GCC (Gulf Co-operation Council) countries have agreed ‘in principle’ to the GCC VAT Agreement to levy VAT (Value Added Tax) in the region. This will help the region to reduce their dependence on oil and other hydrocarbon products as a source of revenue. It is agreed by all the GCC countries that VAT will be introduced in every country latest by 1st January 2019. However, KSA & UAE decided to implement VAT January 1, 2018.

VAT General Principles

Input VAT

Input VAT is the value added tax added to the price of purchased goods or services. The buyer can deduct the amount of VAT paid, If the buyer is registered with the tax authority.

Output VAT

Output VAT is the value added tax calculated and charged on the sales of goods and services.

Exempt Supply

An exempt supply is a supply on which VAT is not charged and for which the related input VAT is not deductible.

Zero-rated supply

A zero-rated supply is a taxable supply on which VAT is charged at 0% and for which the related input VAT is deductible.

Standard Rate Supply

A taxable supply at the Standard Rate is a supply on which VAT is charged at 5% and for which the related input VAT is deductible. All items which are not coming under both exempted category, as well as zero-rated category, are coming under standard rated supplies.

Reverse charge mechanism

the Reverse Charge Mechanism is applicable while importing goods or services from outside the GCC countries. Under this, the businesses will not have to physically pay VAT at the point of import.

The responsibility for reporting of a VAT transaction is shifted from the seller to the buyer; under Reverse Charge Mechanism. Here the buyer reports the Input VAT (VAT on purchases) as well as the output VAT (VAT on sales) in their VAT return for the same period.

The reverse charge is the amount of VAT one would have paid on that goods or services if one had bought it in the KSA or UAE. The importer must disclose the amount of VAT under both Input VAT as well as Output VAT categories of the VAT return of that period.

Reverse Charge Mechanism eliminates the obligation for the overseas seller to register for VAT in KSA or UAE.

VAT Services

Tax Agent Service

It will not be always possible for taxpayers to look after the issues on tax matters and resolve it with the tax authority (GAZT or FTA) by itself. It will be important for taxpayers to appoint an expert to handle tax matters.

Appointing a Tax Agent or at least a Tax Consultant will help taxpayer to identify the right “Dos and Don’ts” which will result is better tax planning.
Tax Agent can represent taxpayer in front of the Tax Authority and hence if any assessment notice comes in future for the taxpayer, the experienced Tax Agent’s service will be crucial.

Once ABCPA is appointed as your tax agent, we will be responsible to provide all the information, documents, records and data to the Tax Authority (GAZT or FTA) if requested to submit on behalf of you. We will act on your behalf with regards to your tax affairs.

VAT Implementation Services

Businesses need to take necessary steps for VAT implementation into their operations. ABCPA offers support to businesses for VAT implementation in KSA & UAE.
Steps involved in VAT Implementation Services:

Understand the business activity:

We obtain an understanding of the business for designing a VAT Implementation plan which meets VAT compliance requirements.

Training of Accountants:

In this phase, we provide training on the treatment of VAT to the accounting department.

Registration for VAT:

As part of VAT implementation, we advise regarding procedures and the date by which registration must be made.

Accounting systems under VAT:

The present accounting systems will be scrutinized. Proper classification/ grouping with appropriate chart of accounts suitable for VAT requirements will be suggested.

Invoicing under VAT:

The requirements of VAT invoicing under the VAT Law will be implemented. Proper guidance will be given to the IT persons and proper training to the Accounting and other departments connected to sales.
ABCPA supports the client by conducting training & advising them on the impact of VAT on their business. We provide VAT implementation services around KSA & UAE.

VAT Return Filing Service

As per the VAT Law article (24) & Federal Law No. (7) of 2017 on Tax Procedures article (8), a taxable person needs to file a VAT return with the tax authority for information and data specified for Tax purpose in accordance with the form, specified by the Tax Authority. Every taxable person is required to submit the VAT Return for each Tax period and remit the tax due to the tax authority within 28 days of the end of the tax period.
Our Tax professionals in ABCPA can support you in the following areas:
Prepare the VAT return on behalf of your business in accordance with the provisions of VAT law.
Ensure that the VAT returns are filed within the specified time in each tax period.
To represent in front of the authority on behalf of your business as and when required.
ABCPA assures the best VAT Return Filing Services. For more information please contact our representatives.

VAT Registration & Deregistration Services

VAT Registration is mandatory for all businesses having an annual turnover of more than SAR or AED 375,000. All businesses with annual turnover more than this threshold must register for VAT before 31st December 2017.
Registration for VAT is an online process.

VAT Registration in KSA

VAT Registration in UAE

If you need assistance with registration,
please contact us.