Thomas Vanhee is the Founding Partner at Aurifer, a boutique tax advisory firm established in Dubai, and respected author for several international publications and tax technical magazines. Regarded as the authority for indirect tax law within the Middle East, Thomas is also an esteemed lecturer of VAT law.
This is an unofficial English Translation of the General Authority of Zakat and Tax’s Board Resolution. It has no legal or binding force. While this translation has been prepared with the utmost care, for any potential discussion around legal terms of this document, the original Arabic version prevails. The contents of this material are for educational purposes only and does not constitute any advice. Neither Aurifer nor Innovate Tax shall be held liable for any direct or indirect loss or profit or any other damages, including but not limited to special, incidental, punitive, consequential or other damages when relying solely on the contents of this material.
General Authority of Zakat and Tax Board Resolution No. (9-3-19) dated 30-10-1440 A.H. corresponding to 3-7-2019 A.D.1
Approval to amend some articles of the Implementing Regulation of the Value Added Tax (“VAT”) system
The Board of Directors of the General Authority of Zakat and Tax (“Board”), based on powers authorized by Article (Five) of the Authority’s regulation issued by virtue of Cabinet resolution no. (465) dated 20-7-1438 A.H. and upon the Board’s resolution no. (3839) dated 14-12-1438 A.H. stating approval on the Implementing Regulations of the VAT system.
Decided the following:
First: Approval of the amendments of some articles in the Implementing Regulations of the VAT system as per the attached provisions.
Second: Preparation of internal controls to be approved by the Board regarding the cases of the guarantee request.
Third: This resolution shall be published in the Official Gazette, it being deemed enforceable from the date of publication and the personnel responsible for execution of this resolution shall be informed therewith.
Allah is Arbiter of Success.
1 published in Umm Al-Qura Gazette, Issue No. 4787 dated 12 July 2019 (corresponding to 9 Dhu Al Qaidah 1440 H), https://www.uqn.gov.sa/articles/1563367850835491700/, consulted on 22 July 2019.
Amendments proposed to the articles of the VAT Implementing Regulation.
The most important amendments required to be made – Article Thirty-Three (Services supplied to non-GCC residents)
Current Text | Text after the proposed amendment |
1. A Supply of services made by a Taxable Person to a Customer without a place of residence in any Member State is zero-rated, provided that each of the following conditions is met:
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Will be completely deleted and replaced by clause (1), as follows:
1. With exception to the cases provided in the second paragraph of this Article, a supply of services by the taxable person to a customer who is not resident in any Member State is subject to a zero rate. Add Paragraph (2) 2. Paragraph one of this article is not applicable in any of the following cases:
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The most important amendments to be made – Article Sixty-Five (Guarantee)
Current Text | Text after the proposed amendment |
1. In cases where the Authority has evidence or reason to doubt that a Taxable Person will not make his VAT and associated payments in an accurate and timely manner, it may require that cash security or a bank guarantee is provided as a precondition for VAT registration, subject to the following requirements:
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1. With exception to the cases stated in the second and third paragraphs of this article, the Authority may request from the Taxable Person to provide a cash security or a bank guarantee against his tax liabilities, subject to the following controls:
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The most important amendments to be made – Article Sixty-Six (Records)
Current Text | Text after the proposed amendment |
Clause Four: | |
4. The Taxable Person may appoint a third party to comply with the record storage requirements. The Taxable Person in all cases remains directly responsible for such compliance. | 4.
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Clause Five: | |
5. The Tax Representative of a Non- Resident Person with no establishment in the Kingdom must maintain the invoices, books, records and accounting documents of the Non-Resident Person. | 5. The Tax Representative for the Non- Resident Person shall assume the responsibility of maintaining the invoices, documents, books and records related to activity of this Non-Resident Person. |
The most important amendments to be made – Article Seventy (Refund of Tax to Designated Persons)
Current Text | Text after the proposed amendment |
Clause Eight: | |
8. Tax will not be refunded in respect of Supplies of Goods and services which are prescribed by article fifty of these Regulations to not be incurred in the course of a Taxable Person’s Economic Activity. | 8. Tax will not be refunded in respect of Supplies of Goods and services which are prescribed by article fifty of these Regulations to not be incurred in the course of a Taxable Person’s Economic Activity. As an exception to this, requests for refund of VAT submitted by Designated Persons approved in accordance to paragraph two of this article are eligible to be refunded. |
Clause Eleven: | |
11. The Authority may request copies of Tax Invoices or additional information from the Eligible Person either electronically or in physical form. In such cases, the applicant must provide the requested information within twenty (20) days from the Authority’s request. | 11. The Authority may request copies of Tax Invoices or additional information from the Eligible Person either electronically or in physical form. Such requirements must be provided within the period which is specified by the authority in its request and which shall not be less than twenty (20) days from the date of the authority’s request in all cases. |
The most important amendments to be made – Article Seventy-Seven (Tax Representatives and Appointed Persons)
Current Text | Text after the proposed amendment |
Clause Two: | |
2. All Non-Resident Taxable Persons must have a Tax Representative. The Tax Representative shall be jointly liable for payment of any Tax due by the Taxable Person until such date the Tax Representative is confirmed by the Authority as ceasing to act on behalf of that Taxable Person. | 2. The Non-Resident Taxable Person can appoint a Tax Representative resident in the Kingdom to represent him in all matters related to VAT. The Tax Representative shall be jointly responsible with the Taxable Person for payment of any financial commitments related to the VAT. The annual responsibility of the Tax Representative shall not exceed the double of the average quarterly value of the Output Tax for the concerned Taxable Person. The Tax Representative shall remain responsible until such date the Tax Representative is confirmed by the Authority as ceasing to act on behalf of that Taxable Person. |
Clause Three: | |
3. A Taxable Person who is resident in the Kingdom may appoint a Tax Agent to act on that Taxable Person’s behalf in respect of its VAT obligations in the Kingdom by submitting a notification. Notwithstanding the appointment of a Tax Agent, the Taxable Person shall maintain individual responsibility for all such obligations. | 3. All Non-Resident Taxable Persons shall provide a guarantee subject to the requirements set forth in Article Sixty-Five of this regulation as a prerequisite for the purposes of the VAT registration. |
The most important amendments to be made – Article Seventy-Nine (Transitional Provisions)
Current Text | Text after the proposed amendment |
Clause Six: | |
6. Any Member State which has not introduced VAT following 1 January 2018 will be considered a country outside of Council Territory in accordance with the Agreement. A Supply treated under the provisions of the Agreement as made in such Member State shall be considered as being made in a third country outside of Council Territory and persons who is a Resident Person in such Member State will be treated as residents of a third country. | 6. Any Member State which has not introduced VAT, or which has no Electronic Services System linked with the Kingdom of Saudi Arabia, will be considered a country outside of Council Territory in accordance with the Agreement. A Supply made between the Kingdom and such a State shall be considered as being made with a third country outside of Council Territory and a person who is a resident in such a Member State will be treated as resident of a third country. |
Clause Seven: | |
7. Prior to the introduction of the Electronic Services System in all Member States:
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7. Supplies of goods made prior to the introduction of the Electronic Services System shall be treated as follows:
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