Saudi money transfer fees to increase 5%

The cost of transferring money in Saudi Arabia will increase from next year as the country applies a 5 per cent value added tax to transaction fees.

The General Authority of Zakat and Tax confirmed VAT would apply to the transfer fee and not the transfer amount and this would be collected from the person doing the transfer.

Other financial services will be exempt including interest on loans or lending charges from credit cards, life insurance, mortgages, leasing finance, banknotes, security transactions, current accounts, deposits and savings accounts.

Enterprises engaged in economic activity subject to the tax will have the right to recover the amount paid. However, those in the exempt category are not entitled to recover the amount of tax paid on their taxable inputs.

Saudi Arabia is introducing the 5 per cent VAT rate alongside the UAE on January 1.

It will see the prices of food items, utilities, telecoms services and other products increase.

Read: Saudi phone, utility bills to increase 5%

The other Gulf Cooperation Council states are expected to follow later in 2018 or in early 2019.

Read: All GCC states still committed to VAT but dates will vary, IMF says

Businesses are still being encouraged to register for the tax through the VAT.GOV.SA website.

Read: Saudi businesses with revenue exceeding SAR375,000 to pay VAT from Jan