Circular on loyalty programs and VAT implications

The Zakat, Tax and Customs Authority (‘ZATCA’) in KSA published a Circular on its website explaining the VAT implications of loyalty programs offered by financial institutions. The Circular provides interpretations on VAT implications related to offering loyalty points to customers, transactions between financial institutions and participating merchants, and loyalty point redemption. It also includes definitions and examples. The Circular highlights that no separate VAT implications apply when loyalty points are offered to customers without additional consideration. It also explains the VAT implications for financial institutions in scenarios involving transactions with participating merchants and loyalty point redemption. The guide also includes a list of Frequently Asked Questions to assist taxpayers in understanding the VAT implications of loyalty programs.

Source PwC

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