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Value added tax

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Value added tax

“We provide the service of preparing and submitting VAT returns electronically, along with following up on all procedures with the relevant authorities. We help you accurately calculate the VAT amount from the total value of goods or services, in addition to offering a variety of other VAT-related solutions.”

Note that this tax is imposed in approximately 166 countries around the world.

In 2018, Saudi Arabia began applying an indirect tax of 5 percent on the supply and import of goods and services, which increased to 15 percent in 2020 to confront the COVID-19 pandemic. This tax is imposed in more than 166 countries worldwide on consumption, and it is collected from companies throughout all stages of supply.

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Types of value added tax

We believe that every business is unique, and our approach is never aimed at growth.

Identify the subject companies

Companies are classified into two types in terms of value-added tax based on their annual sales volume.

Mandatory registration

VAT requires all residents in the Kingdom of Saudi Arabia whose annual taxable supplies exceed 375,000 SAR to register. Starting from 2018, these companies must register, collect the tax, and submit returns if their revenues exceed 1,000,000 SAR during the past twelve months.

Optional for small businesses

VAT allows companies with income between 187,500 and 375,000 SAR to avoid registration. These companies may choose not to join the tax system, but they must monitor their revenues carefully, especially if they exceed 375,000 SAR.

The method for calculating value-added tax in Saudi Arabia is based on two formulas:

First formula: Adding VAT to the base price

This formula is used when the advertised price does not include VAT. Simply, the 15 percent tax rate is added to the base price of the product or service.

Second formula: Removing value-added tax from the total price.

If the advertised price includes VAT, this formula is used to deduct the 15 percent tax from the total amount in order to determine the base price.

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What we offer in VAT

Providing specialized consultations

We help our clients understand the laws and procedures related to value-added tax, and we provide them with specialized advice to facilitate the tax compliance process.

Sourcing analysis

We provide a comprehensive analysis of the client’s supplies to determine whether they are subject to VAT, zero-rated, or exempt.

Company registration

We facilitate the VAT registration process for both resident and non-resident companies to ensure compliance with local regulations.

Provide ongoing support

We provide continuous support to clients throughout all stages of VAT management, including follow-up with the relevant authorities.

Preparing tax returns

We prepare VAT returns with accuracy and professionalism, ensuring that all required information is included in accordance with the applicable regulations.

Training internal teams

We provide training courses and workshops for corporate finance teams to enhance their understanding of VAT calculation mechanisms and return preparation.