RIYADH — The Zakat, Tax and Customs Authority has clarified on Monday that the sale of used vehicles is subject to value added tax (VAT) only if they are sold by a showroom or a person who is registered in the VAT system.
The authority stated that selling a vehicle by an individual, who is not registered in the VAT system and who does not practice an economic activity, to another individual is not subject to VAT.
The authority clarified that those who are registered in the VAT system are obligated to collect the tax and make payment to the authority, while persons who are not registered in system are not entitled to collect and make payment of the tax to the authority.
It is noteworthy that everyone who engages in an economic activity is required to register in the VAT system if the annual revenues reach the mandatory limit of SR375,000.
As for people whose annual income exceeds SR187,500 but is below SR375,000, they are eligible for voluntary registration, while people whose annual revenues are less than SR187,500 are not obligated for VAT registration.
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