Saudi tax authority warns VAT registration deadline approaching

Saudi Arabia’s General Authority of Zakat and Tax has warned companies that they have less than a month to register for an upcoming value added tax.

The kingdom and the UAE will implement the 5 per cent VAT rate from January 1 and are initially applying it to companies with revenues exceeding certain limits.

In Saudi Arabia, companies with revenues exceeding SAR1m ($266,677) have until December 20 to register and verify their readiness.

Those that fail to do so will face fines of up to SAR10,000 ($2,666) and a suspension from receiving government services like work permit and visa issuance.

The authority said 60,000 companies had registered since the system began accepting applications on August 28.

Companies with revenues between SAR375,000 ($100,000) and SAR1m have until December 20, 2018, to register for the tax on VAT.GOV.SA.

In contrast, the UAE is applying the tax to companies with revenues exceeding Dhs375,000 ($102,000) from January 1, 2017.

Read: UAE’s tax authority urges firms to register for VAT ahead of deadline

Details of how the tax will be applied in Saudi Arabia are still emerging.

In recent weeks the authority has confirmed that VAT will be applied to petrol and money transfers. Phone and utility bills will also be affected on top of many general items and services.

Read: Saudi to apply 5% tax to fuel

The neighbouring GCC states are expected to implement the same VAT rate by early 2019.

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