30 May 2017
Saudi commercial and residential real estate sector will be subject to value-added tax (VAT), with some exceptions that will be announced in the implementation regulations, a top Saudi official revealed at a workshop according to local media.
VAT will also not be imposed on bank loans, said Hammoud Al Harbi, VAT project manager at the General Authority of Zakat and Tax, according to Arabic newspaper Okaz.
“Countries worldwide do not impose VAT on bank loans. And it is reasonable to exempt this category from taxation since imposing 5 percent tax on bank loans would raise the costs for banks, especially that some banks earn less than 5 percent on them,” Al Harbi said at a workshop organised by the Chamber of Commerce and Industry at Eastern province.
The authority also noted that it will delay VAT collection related to capital assets for big entities that need many years to be established and require high value imports, considering that no revenue is generated until the start of operations and productions.
“E-commerce is subject to VAT through two categories, ‘distance selling’ of imported goods through transport companies from inside or outside the kingdom, as well as digital products that include movies, music, and computer software,” Al Harbi added.
As for the zero-rated categories, claiming back the value of the tax will be done through an electronic portal on the authority’s website, Al Harbi noted.
“The authority will impose VAT on the bills of goods whether in inventories or recently imported,” he added.Further reading:
© Express 2017