GAZT issues guidelines on raising VAT to 15%

The General Authority of Zakat and Tax (GAZT) issued on June 25 guidelines for raising the value-added tax (VAT) to 15% from 5%, which will come into effect on July 1, 2020.

Saudi Arabia imposed a 5% VAT on all goods and services on Jan. 1, 2018, except for the zero-rated, and exempt categories.

The 15% VAT will apply to supplies as of July 1, 2020. Meanwhile, the zero-rated and exempt goods and services will not be impacted by the new VAT.

For tax invoices, GAZT explained that the zakat authority had earlier said that before May 11, 2020, a 5% VAT will apply to supply contracts, provided that goods will be already supplied ahead of June 30, 2021.

From May 11 to June 30, 2020, a 5% VAT will apply, in case goods are already supplied before the end of June, 2020, while a 15% VAT will apply if goods are supplied on or after July 1, 2020.

For the contracts made between VAT-registered institutions and government entities, a 5% VAT will apply before May 11 to existing contracts until the date of termination, renewal or until June 30, 2021.

For the period from May 11 to June 30, 2020, a 5% VAT will apply if goods are already supplied before the end of June, 2020, but a 15% VAT will apply to supplies as of July 1, 2020.

For the contracts concluded between two VAT-registered entities, a 5% VAT will apply before May 11 to existing contracts until the date of termination, renewal or until June 30, 2021.

For the period from May 11 to June 30, 2020, a 5% VAT will apply if goods are already supplied before the end of June, 2020, while a 15% VAT will apply to supplies as of July 1, 2020.