SAUDI ARABIA: VAT interpretation on services for tangible goods

 Saudi Arabia is slowly defining their implementation of 15% VAT rate to supply of services to non resident companies. A new circular issued by GAZT mentions that “administrative, consultancy and promotional services, market research, public relations and communication services” that have tangible goods as their main subject will be subject to 15% of VAT. This circular is not legally binding but it is nevertheless an indication of how GAZT interprets VAT on these services that was not this clear before.

Going forward if these companies now need to start implementing VAT for their services to non resident clients it will considerably add to their service rates and therefore have an impact on their business.

Source: gazt.gov.sa

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