Saudi Arabia: Proposed KSA Amendments to the VAT Executive Regulations - Public Consultation Closes 13 June 2023

02 Jun 2023    3 minute read

In brief

The General Authority of Zakat and Tax (ZATCA) recently issued proposed amendments to the Kingdom of Saudi Arabia (KSA) VAT Executive Regulations which will be open for public consultation until 13 June 2023: Link

The most notable proposed VAT amendments are as follows:

  • Enhance Article 8(8) to make it mandatory for online shops to display their VAT registration certificate in a manner visible to the public (i.e., perhaps on the online landing page).
  • Expanding the ambit of the exempt supplies in Article 29(7) to include fees, commissions or any commercial discount which may be payable in exchange for the provision or transfer of a life insurance contract or reinsurance of a life insurance contract.
  • Article 63(3) amendment increases the limit, to correct any identified error resulting in a tax differences in the next tax return, from SAR 5,000 to SAR 15,000 (resulting in less voluntary disclosures to be submitted).
  • Article 63(3) amendment decreases the statutory limitation for VAT from five years to three years.

Contents

The ZATCA recently issued proposed amendments to the RETT Executive Regulations which will be open for public consultation until 13 June 2023: Link

  • Amendment of subparagraph (16) of paragraph (a) of Article III Exemption: Real estate disposal by a natural person of a company or investment fund established in the Kingdom and this person owns – directly or indirectly – all the company's shares, shares or fund units, including the case that the percentage of full ownership of natural persons in the property and the entity disposing of it matches and provided that there is no change in the percentage of ownership of the company or fund disposed of for a period of not less than five years from the date of real estate disposition.
  • Amendment of subparagraph (17) of paragraph (a) of Article III Exemption: Real estate disposal between one company and another two institutions in the Kingdom, one of which owns - directly or indirectly - all the shares or shares of the other company, real estate disposal between a company and an investment fund established in the Kingdom and the company owns - directly or indirectly - all units of the fund, and real estate disposal between companies or investment funds established in the Kingdom whose shares, shares or units are owned - directly or indirectly - by the same persons. In all cases, all the disposed shares, shares or units of the disposed fund shall remain owned, directly or indirectly, by the same persons for a period of not less than five years from the date of the real estate disposition.
  • Addition to Article VI:
    • Paragraph (3) - (5): Places a time limit of three years from the date of the real estate disposition for the ZATCA to investigate any transaction and estimate the value of the real estate disposition and demand any (additional) tax due. Where a real estate transactions has not been disclosed to the ZATCA, the three year time limit begins from the date of ZATCA's knowledge of the undocumented or undisclosed real estate disposition.
    • Paragraph (6): The periods mentioned in this Article shall not affect the Authority's right to claim payment of the due tax in cases where the time restrictions specified in Article III of the Regulations are violated.
  • Addition of article XI bis:
    • ZATCA commits to issue additional guidance and tax bulletins to make adhering to the RETT Executive Regulations easier on taxpayers.
    • ZATCA may issue a private or public interpretative decision to clarity tax treatment of any transaction and indicate the period to which it applies.
    • ZATCA will abide by the content of the interpretative decisions, guidelines and tax bulletins from the date of publication.
    • The purpose of any document issued by ZATCA will be to clarify how the Regulation shall apply to a particular circumstance involving a specific set of facts only.

To speak with us in relation to any tax matters or issues more generally, please contact one of the team members above.

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* Content prepared by Legal Advisors in association with Baker & McKenzie Limited.

Contact Information
Tina Hsieh
Partner
Dubai
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Reggie Mezu
Special Counsel
Dubai
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reggie.mezu@bakermckenzie.com
Trusha Makan
Associate
Dubai
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trusha.makan@bakermckenzie.com
Ben Phillips
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ben.phillips@bakermckenzie.com

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