VAT ALERT: KSA amended certain VAT regulations while issuing mechanism of private educational sector

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Amendmends

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has recently approved various amendments in the articles of the Value Added Tax (VAT) Implementing Regulations. 

Following are some of the major amendmends:

Article 8: The VAT registration certificate should be displayed and visible to the general public.

Article 53: All registered businesses need to issue a simplified VAT invoice for all transactions not otherwise covered.

Article 63: The taxable Person may correct an error or understatment below SR 5,000 by adjusting the Net Tax in its next Tax Return.

Businesses that do not comply with the above requirements will be penalized up to SAR 50,000.

Mechanism of VAT on private educational sector


Royal Decree No. (A/86) dated 18/4/1439 AH.  - 


GAZT announced the mechanism for bearing of VAT by the government on behalf of Saudi nationals in the private educational sector:

Saudi citizens: Private educational institutes registered with VAT must issue tax invoices to Saudi citizens, however, after excluding the tax amount. The institutions shall keep record of such services provided to the nationals including their identity numbers.

Note: These transactions must not be considered exempt as the institutes will still be entitled to claim input tax and government shall bear the burden of VAT of Saudi nationals.

Non-Saudi citizens: The institutions are required to issue tax invoices including the 5% VAT rate in correspondence with the VAT law and regulations.

When filing their tax returns through the website, the private sector institutions should enter the non-Saudis transactions which are subject to the standard 5% rate in the “Local Sales Subject to the Standard Rate” section. Meanwhile, the transactions with Saudi nationals should be entered in the "Sales to citizens (private health services / private education / first residence)". Similar to other sectors, the private educational institutions registered for VAT are entitled to deduct the tax due on inputs, as outlined by the VAT law and regulations – that is, these transactions are NOT treated as exempt from VAT.

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