RIYADH — Following the publication of the GCC VAT framework agreement in the Official Gazette on April 21, 2017, the Kingdom of Saudi Arabia has become the first GCC country to publish its draft VAT law. An official bilingual version of the draft VAT law in Arabic and English can be found here.
The General Authority of Zakat and Tax has also issued public consultation inviting comments on the provisions of the draft VAT law by way of an electronic form made available on their website. The deadline for the submission of feedback is June 29, 2017. The consultation form includes a questionnaire to assess the readiness of KSA businesses for VAT implementation.
VAT is expected to be introduced in KSA from January 1, 2018. Among other things, the draft VAT law includes provisions on the imposition of tax, taxable persons, supplies of goods and services, place of supply, exempt and zero rated supplies, taxable value, imports, calculation of tax, procedure and administration and penalties and fines. The KSA draft VAT law, which is based on the common principles set out in the GCC Framework agreement, will be supplemented by executive regulations. These regulations, which are yet to be issued, will provide more detail on the VAT treatment of specific goods and industry sectors.
Given that VAT will be effective in KSA from January 1, 2018, it is important to undertake a VAT impact assessment and be ready to comply with the VAT requirements before the go-live date. — SG
