Saudi Arabia will apply a 5 percent value-added tax (VAT) to some goods and services starting today, Jan. 1, 2018.
The new tax applies to all goods sold by a taxable person, regardless of the production date.
Select supplies in sectors such as transportation, real estate, financial services will be exempt from the new levy, while certain government activities will be untaxable.
All establishments with annual revenue exceeding SAR 1 million were required to register for VAT before Dec. 20, 2017. However, small businesses with annual income of less than SAR 1 million were given a grace period for VAT registration until Dec. 20, 2018.
Below is a list of some of the goods and services subject to VAT in the Kingdom:
|
Goods and Services |
|
|
|
VAT rate |
|
Foodstuffs |
5% |
|
Transportation |
|
|
Local transportation |
5% |
|
International transportation of passengers and goods (intra-GCC) |
0% |
|
Domestic passenger and goods transportation and related services |
0% |
|
Qualified international transportation means (land, sea, air) |
0% |
|
Spare parts, maintenance and repair services for qualified means of transportation (under certain conditions) |
0% |
|
Real estate |
|
|
Sale and rent of commercial property |
5% |
|
Sale of residential property |
5% |
|
Sale of a residential property for use as a permanent home by the buyer |
Untaxable |
|
Rent of hotels, furnished units |
5% |
|
Rent of residential property |
Exempt |
|
Rent of residential property for students |
Exempt |
|
Education |
|
|
Private institutions |
5% |
|
Government institutions |
Untaxable |
|
Healthcare |
|
|
Healthcare services in private centers |
5% |
|
Healthcare services in public centers |
Untaxable |
|
Medicines and medical equipment as listed by the health ministry and the Saudi Food & Drug Authority (SFDA) |
5% |
|
Oil and Gas (local sector) |
|
|
Crude oil, derivatives and gas |
5% |
|
Investment gold, silver and platinum, jewelry |
|
|
If purity is no less than 99 percent, tradable in global markets |
0% |
|
If purity is less than 99 percent |
5% |
|
Telecommunications and electronic services |
|
|
Wired and wireless telecommunications and electronic services |
5% |
|
Financial services |
|
|
Margin based products |
Exempt |
|
Current accounts, deposits, savings |
Exempt |
|
Direct fees, commissions, or commercial deductions |
5% |
|
Insurance products, including medical insurance |
5% |
|
Life insurance and reinsurance services |
Exempt |
|
Interest on loans and lending fees charged with an implicit margin including credit cards |
Exempt |
|
Interest on loans and lending fees charged with an implicit margin including leasing finance |
Exempt |
|
Issuance or transfer of bonds, banknotes |
Exempt |
|
Government services |
|
|
Public services provided by non-profit government authorities, i.e. passport and driving license renewal, etc. |
Untaxable |
|
Others |
|
|
Export of goods and services to outside the GCC implementing states |
0% |
|
Services provided for GCC non-residents who benefit from such services outside the GCC countries |
0% |
|
Activities of employees under contracts (employee salaries) |
Untaxable |
|
Supplies among members of same tax group |
Untaxable |
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