In a recent update, Zakat, Tax, and Customs Authority (ZATCA) has clarified that there is no rule for refunding of VAT on cars exported from Saudi Arabia.
This comes after a query from a Saudi national who wanted to know if he could get a VAT refund after buying an automobile and exporting it out of the country, ZATCA provided the clarification.
After paying a new VAT in the nation where he exported the car, he was asked to receive a refund of VAT in Saudi Arabia.
It specified that if a service or good is rendered by an organisation, an activity, or a business owner who is registered with the VAT system, then all goods and services are liable to 15% VAT.
Saudi Arabia derives a significant portion of its income from exports. Although petroleum products continue to be the nation’s primary export, Saudi Arabia also exports a significant amount of machinery, cars, and plastic goods.
How is VAT treated on Export Goods from Saudi Arabia?
Goods exported from Saudi Arabia to destinations outside the GCC will be subject to a zero rating. This implies that there won’t be any taxes on these supplies. This provision is intended to serve as a motivator for companies that export goods to nations outside of the Gulf Cooperation Council.
Conditions Related to Zero-Rated VAT on Goods Exported
Goods moving from Saudi Arabia to a location outside the GCC will be zero-rated as long as the following requirements are satisfied:
The goods supplier must provide evidence about goods transported within ninety days from the date of supply out of the GCC.
Therefore, those who export goods from Saudi Arabia to a nation outside the GCC must make sure that the commodities are removed from GCC territory no later than ninety days following the date of supply. Furthermore, the supplier must keep proof of the same.
What if the Evidence is Rejected?
There is a high chance that the paperwork which the registered person has about commodities sold to nations outside the Gulf Cooperation Council (GCC) may be rejected by the General Authority of Zakat & Tax (GAZT). These will apply when there is insufficient proof in the paperwork to support the claim that the items are being transferred outside of the GCC. Until such evidence is available, the supply in these situations shall be deemed to have been made in the GCC. The regular VAT rate of 5% will be charged on such supplies.
