Saudi Arabia to impose VAT on petrol, tax authority confirms

As deadline looms, companies not ready for the new tax - official
Saudi Arabia will implement VAT on petrol from January 1, the General Authority of Zakat and Tax (GAZT) confirmed.
By Staff writer
Sun 19 Nov 2017 01:55 PM

Saudi Arabia will impose VAT on petrol from January 1, the General Authority of Zakat and Tax (GAZT) confirmed. 

In response to a query on Twitter, the GAZT said the five percent tax will be applied when it's implemented in January 2018.

The body overseeing its implementation also confirmed that international transport of passengers and goods is zero-rated, in accordance with the 'Unified VAT Agreement for the Cooperation Council for the Arab States of the Gulf' and the VAT Implementing Regulations.

In contrast, GAZT said the local transport of passengers and goods within the kingdom will be subject to the standard 5% VAT rate, with businesses expected to collect the tax from the traveller when selling the travel ticket.

Saudi tax authorities and the Ministry of Municipal and Rural Affairs are set to sign off on a new agreement to help local businesses register to pay new taxes. 

“Through these agreements, GAZT seeks to encourage businesses to register and achieve readiness ahead of the launch of VAT. We are making every effort to reach out to businesses and provide them with the support and services they need to understand VAT,” Governor of GAZT Suhail Abanmi told Saudi Gazette

With just two months to go, businesses must ready themselves for the implementation of the new tax, Abanmi stressed.

“Businesses have a lot to do to prepare for VAT, and GAZT is doing everything in its power to help businesses and raise their readiness,” he said, adding that businesses with annual revenues exceeding $270 000 (SR1,000,000) must register through the recently launched government tax website before Dec. 20.

Hamad Al-Omar, spokesman of the Ministry of Municipal and Rural Affairs, said the ministry is working alongside tax authorities to ensure the smooth implementation of the new laws.

Businesses with annual revenues between $50 000 (SR187,500) and $100 000 (SR375,000) are eligible to reclaim VAT if they register, while businesses with annual revenues below $50 000 (SR187,500) are exempt from registration.

The official VAT website provides information and resources to support businesses in their preparations for VAT, including video guides, and a comprehensive list of the goods and services subject to VAT.

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