5/22/2020 9:35:04 PM cpa club 7 days ago
The Ministry of Finance, Saudi Arabia has decided to increase the standard rate of VAT from 5% to 15% with effect from 1 July 2020. This measure is intended to address the fiscal imbalance due to loss of oil and tax revenue and the cost incurred to fight the Covid 19.
The General Authority of Zakat and Tax issued a guideline on the transitional provisions which will apply to contracts signed and tax invoices issued before the entry into force of the new VAT rate. The following provisions will apply:
If tax invoices are issued before 11 May 2020 in relation to supplies to be made on or after 1 July 2020, the 5% rate will apply on that supply provided the supply is made before EOD 30 June 2021.
Supplies made on or after 1 July 2021 will be subject to the 15% rate. In this case, the supplier must issue an additional tax invoice for the additional due VAT.
If tax invoices are issued between 11 May 2020 and EOD 30 June 2020 :
• The 5% rate will apply on supplies made before EOD 30 June 2020; and
• The 15% rate will apply on supplies made on or after 1 July 2020. In this case, the supplier must issue (at
the time of supply) an additional tax invoice for the additional due VAT.
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