Saudi Arabia: VAT refund for non-residents requires action by 30 June 2020

Saudi Arabia: VAT refund for non-residents

Non-resident businesses that conduct economic activities outside of the Kingdom of Saudi Arabia may be eligible for a refund of the value added tax (VAT) that they incurred in Saudi Arabia.

1000

Related content

In light of Article 72 of the VAT implementing regulations, these non-residents may be considered to be “eligible persons” if the following conditions are met:

  • They are established in a country with a transaction tax system similar to VAT and are registered for that tax; and
  • A reciprocal arrangement as to the VAT refund exists between Saudi Arabia and that other country.

In addition, foreign governments, international organizations, diplomatic and consular bodies, and missions are also considered to be “eligible persons” and may submit a VAT refund application under the provisions of Article 70 of the regulations.


Deadline for filing refund applications

VAT refund applications must be submitted within six months from the end of the calendar year in which the VAT was incurred. For example, the refund application for the year 2019 is to be prepared and along with relevant supporting documents and submitted to the General Authority of Zakat and Tax (GAZT) before 30 June 2020.


KPMG observation

The administrative process for VAT refunds is still unclear, and the GAZT has yet to publish guidelines on the VAT refund system. Still, eligible businesses need to consider taking steps to preserve their entitlement to a refund of VAT incurred in 2019 by submitting a refund application.

Further, given the recently announced increase in standard rate of VAT from 5% to 15% (effective 1 July 2020), it will be increasingly important for foreign businesses to assess the overall impact of VAT on their operations in Saudi Arabia. In addition to the VAT refund for the calendar year 2019, there may be an opportunity for non-resident businesses to save on increased VAT costs going forward.


For more information, contact the head of KPMG’s Global Indirect Tax Services:

Lachlan Wolfers | +852 2685 7791| lachlan.wolfers@kpmg.com

© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.


For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal