The Kingdom of Saudi Arabia has announced that it will increase its VAT rate to 15% with effect from 1 July 2020. This is a result of the pressures upon the KSA economy from the very low oil prices and diminished VAT revenue caused by the COVID-19 emergency measures.
The relief measures announced by the General Authority for Zakat and Tax (GAZT) regarding the changes of payment dates will continue to be in place.
As a recap of these relief measures, we confirm that the due dates for filing tax returns that are due for periods ending between 18 March 2020 and 30 June 2020 have been extended for three (3) months. The concerned returns include those for:
- Zakat and Corporate Income Tax
- Withholding Tax
- Value Added Tax
- Excise Tax
Accordingly, the above move will defer the payment dates of these taxes to GAZT thus relieving the pressure on corporations to secure and make these payments.
The following tax returns will be affected:
|TAX||TAX RETURN PERIOD||DUE DATE||DEFERRED
|Value Added Tax||1 January 2020||31 March 2020||30 April 2020||31 July 2020|
|Value Added Tax||1 February 2020||29 February 2020||31 March 2020||30 June 2020|
|Value Added Tax||1 March 2020||31 March 2020||30 April 2020||31 July 2020|
|Value Added Tax||1 April 2020||30 April 2020||31 May 2020||31 August 2020|
|Value Added Tax||1 May 2020||31 May 2020||30 June 2020||30 September 2020|
|Excise Tax||1 March 2020||30 April 2020||15 May 2020||15 August 2020|
|Withholding Tax||1 March 2020||31 March 2020||10 April 2020||10 July 2020|
|Withholding Tax||1 April 2020||30 April 2020||10 May 2020||10 August 2020|
|Withholding Tax||1 May 2020||31 May 2020||10 June 2020||10 September 2020|
|Zakat and Corporate Income Tax||1 January 2019||31 December 2019||30 April 2020||31 July 2020|
Further measures introduced are as follows:
- Fines resulting from delayed tax return submissions and tax payments have been suspended for the period from 18 March 2020 till 30 June 2020
- Fines resulting from non-cooperation from a taxpayer and for examination by GAZT have been suspended for the period from 18 March 2020 till 30 June 2020
- Fines for late payment of installments have been suspended for the period from 18 March 2020 till 30 June 2020
- The submission of bank guarantees to GAZT has been suspended for the period from 18 March 2020 till 30 June 2020
- Temporary deferment of Value Added Tax payments for the import of goods by a tax registrant for its economic activities that is payable to the Customs Authority in accordance with the applicable VAT Return for the period which relates to the import
- Temporary deferral of Excise Tax payable to the Customs Authority on the import of goods subject to excise tax on condition of payment and the submission of a temporary declaration on the deferred due date
- Deferral of the collection of customs duties for a period of thirty days upon submission of a suitable bank guarantee for the next three months
- GAZT is to expedite all refund payments due to taxpayers
The above are a welcome alleviation of financial pressures on companies doing business in KSA during the COVID-19 restrictions.
Should there be any matters relating to the above for which you require assistance, our Indirect Tax Department is available to answer your enquiries.
Authored by Head of Indirect Tax and Conveyancing, John Peacock