Amendments to VAT Implementing Regulations in Kingdom of Saudi Arabia (KSA)

These amendments are effective immediately and affect taxpayers who export services from KSA to non-KSA recipients, and also non-resident taxpayers who have VAT compliance obligations in KSA.

Zero-rating of exported services provided to non-GCC residents (“exported service” provisions).

Previously, the Article set out the conditions that must be met for an exported service to be treated as zero-rated. The revised Article now sets out instances where the zero-rated VAT does not apply to an exported service.

This guidance can be seen as a relaxation to the Implementing Regulations and addresses a specific area of concern faced by taxpayers. It is a welcome clarification to multinational businesses and businesses supplying services overseas, as well as non-resident companies that have been required to pay VAT on such supplies.

Other amendments influence the following elements:

• Requirements to provide the GAZT with financial security (e.g., guarantee)
• Storage of VAT-related records for non-resident taxpayers
• Refund of tax to designated persons (e.g., qualifying government bodies)
• Tax representative, tax agents and appointed persons
• Transitional provisions and application of intra-GCC rules

The Arabic version of these changes was published in the Official Gazette, with English translation and guidance from GAZT expected to be released shortly.

All affected taxpayers should carefully consider the impact of the updates to the Implementing Regulations to their business activities.

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