Value Added Tax

Value Added Tax (or VAT) is an indirect tax imposed on all goods and services that are bought and sold by businesses, with a few exceptions.

The 5% value-added tax (VAT) has been calculated on the fees and costs mentioned in the agreements as of January 1, 2018. On financing contracts, a 15% tax will be imposed on financing and services contracts on July 1, 2020, and the tax will be on monthly rent due from July 1, 2020. This includes individual and corporate customer contracts, including the first payment, monthly payments, last payment, and the amount remaining of the asset in the event of early termination.

The VAT will be collected on the original asset and the original insurance on monthly basis with the monthly installment paid by the customer. The installment is divided into three sections, the value of the financed asset, the profit margin plus the insurance amount. Taxes will be calculated on the value of the remaining asset and profit margin does not apply to VAT.

As for the cases that require payment of the tax in advance, they are related to payment of administrative fees at the beginning of the contract and payment of services required after the contract. Example (Driving authorization fees, Transfer fees, Press release fees, etc.) The tax also applies to financing solutions for new and used vehicles and does not apply to Share Murabaha financing solutions.

• Administrative fees
• Internal and External Authorization (Issuance - Renewal)
• Add an actual driver for the car
• Car towing fees
• Accident charges
• Renewal of car ISTIMARAH
• Transfer fees for Tayseer finance
• Any other services that with fees
• In case of early settlment
• Lawyer fees
• Advertising fees in the newspaper

The General Authority of Zakat and Tax (GAZT) is responsible for managing the implementation, administration and enforcement of VAT in Saudi Arabia. It does so in close coordination with other relevant entities.

For more information, please visit The General Authority of Zakat and Tax website: www.vat.gov.sa/en

Or you may call General Authority of Zakat and Tax on 19993 or by Email through info@gazt.gov.sa

Or by visiting their twitter page www.twitter.com/Gazt_care