The Zakat, Tax and Customs Authority (ZATCA) has published significant amendments to the VAT Implementing Regulations in the Umm Al Qura Gazette on April 18, 2025. Here’s a summary of the key updates:
- VAT Grouping Rules Rewritten:
- Stricter residency, control, and eligibility criteria for forming VAT groups.
- Existing VAT groups have a 180-day grace period to comply.
- Certain eligible persons, like real estate developers, can no longer be part of VAT groups (with some exceptions).
- Deemed Supply Expanded:
- Use of goods after deregistration is now a deemed supply.
- Supplies made without payment are non-taxable if input VAT wasn’t previously claimed.
- Adjustments required for partially unpaid invoices after 12 months, impacting input VAT recovery.
- Business Transfers (TOGC):
- New strict conditions for transferees to maintain the same activity post-transfer.
- Mandatory reporting to ZATCA within one month of the transfer.
- Reverse Charge for E-Services Clarified:
- Article 47 specifies when online platforms are considered suppliers.
- Platforms may be liable for VAT collection for supplies by non-resident or non-registered suppliers.
- Refund Regime Overhauled:
- Article 70 restructured with quarterly or annual refund periods based on applicant category.
- Stricter documentation and timing requirements; claims must be submitted within 6 months.
- Minimum SAR 5,000 threshold for refund requests.
- Expanded rights for foreign governments, international organizations, and diplomats.
- Customs Suspension and Special Zones:
- Zero-rating for supplies under customs suspension arrangements and movement to/from special zones, with strict documentation rules.
- Tourist Refund Scheme Enhanced:
- Clarified eligibility, excluding food, fuel, and certain personal goods.
- Tourists from other GCC countries remain eligible until e-service integration is complete.
- Expanded Definition of Services (Article 14):
- Services now encompass any non-goods supply, including granting rights, providing access, or licensing intangible rights (e.g., IP, trademarks, copyrights).
Source
- Amendments to VAT Regulations: The Kingdom of Saudi Arabia has approved significant amendments to the VAT Implementing Regulations, effective from April 18, 2025, with specific provisions taking effect later. These changes aim to enhance compliance and clarify procedural requirements for businesses, particularly regarding VAT grouping, deemed supplies, and the transfer of economic activities.
- Key Regulatory Changes: New provisions include the ability for multiple legal entities to form VAT groups under specific conditions, expanded definitions of service supplies, detailed rules for deemed suppliers, and clearer guidelines for VAT refunds, including for tourists. The amendments also address compliance issues related to electronic marketplaces and special economic zones.
- Recommendations for Businesses: With various provisions coming into effect at different times, businesses are urged to conduct timely impact assessments, update their VAT systems and processes, and stay informed about further guidance from the Zakat, Tax and Customs Authority (ZATCA) to ensure compliance with the updated regulations.
Source PwC
