Saudi Arabia announces transitional rules for VAT rate increase

GAZT has now published a transitional VAT guide, clarifying how VAT will apply to contracts straddling the effective date of the increased VAT rate.

Continuous supplies

Contracts concluded before 11 May 2020:

The supply is subject to the VAT rate at 5% until the contract expiry or date of renewal of the contract or 30 June 2020.

Contracts concluded between 11 May 2020 and 30 June 2020:

If the supply of goods or services takes place before 30 June 2020, it will be subject to VAT at the rate of 5%, otherwise, the VAT rate applicable is 15%.

Tax invoices

– Tax invoices issued before 11 May 2020 and the supply of goods and services will take place on or after 1 July 2020:

The supply is subject to VAT rate at 5% providing it takes place before 30 June 2021.

– Tax invoices issued between 11 May 2020 and 30 June 2020:

If the supply of goods or services takes place before 30 June 2020, it will be subject to VAT at the rate of 5%, otherwise, the VAT rate applicable is 15%.

– Tax invoices issued for continuous supplies

If the supply takes place before 30 June 2020 and continues after this date, it will be subject to VAT at the rate of 5% for the portion that takes place before 30 June 2020 and, to the rate of 15%, for the portion that takes place from 1 July 2020 onwards.

Source Credit – keypoint

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