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ZATCA amendments to VAT Regulations dated June 15, 2023

The Board of Directors of the Zakat, Tax and Customs Authority "ZATCA" issued Resolution No. (01-04-23) dated 11/26/1444 AH approving the amendment to the executive regulations of the value-added tax law. Here are listed the most notable amendments :

1. Amending Paragraph (8) of Article (8), whereby the taxable person is now obligated to display the registration certificate to the public, even in his electronic stores, and not just limited to his main place of business and its branches.

2. Amending Paragraph (5) of Article (9). The amendment included a clarification of the activities carried out by government agencies that are considered a “public authority” meaning that they are not classified as an economic activity for the purposes of applying the value-added tax, and they are as follows:

A- The existence of a legal instrument that authorizes the government entity to carry out the activity.

B- The government entity should not carry out the activity in accordance with economic/commercial standards

C - The government entity must practice the activity exclusively, that is, the private sector cannot compete for this.


3. Adding paragraph (7) to Article (Nine), in which it was indicated that the scope of the provision contained in paragraph (6), in which it was stated that economic activity does not include the activity practiced by workers and others to the extent that they are contractually linked to the employer or Any connection through which the employment relationship is established, to include also the consideration specified as benefits or wages for workers in employee secondment services contracts, which are:

A- The working relationship between the seconded worker and the client must be achieved.

B - The customer (beneficiary of the service) must be a legal person, or a natural person in accordance with controls issued by a decision of the governor.

C - The supplier must be a government entity, a licensed human resources company, or a person who has obtained a permit to loan labor services from the competent authority.

D- The contract, agreement, or other contractual documents between the supplier and the customer must include a detailed explanation of the value of the worker’s wages or

benefits, and the value of the commission subject to tax in details.


4. Amending Paragraph (7) of Article (Twenty-Nine), by expanding the scope of the exemption related to financial services for the provision or transfer of a life insurance contract or a life reinsurance contract, even if the financial consideration has been paid explicitly as a fee, commission, or commercial discount.


5. Amending Paragraph (4), adding Paragraph (9), and adding Paragraph (10) of Article (Thirty-Four); Regarding qualified means of transportation subject to the zero rating, the amendment included a requirement that the customer provide ZATCA or supplier with a certificate stating that it is a qualified means of transportation, and the supplier must maintain this certificate. The rest of the paragraphs also indicate that the customer must, before issuing the certificate, verify the eligibility of the means and that it is used at a rate of no less than (75%) for the purposes of international transportation.


6. Adding Article Thirty-Six bis (2); Which stipulates that, taking into account what was stipulated in Paragraph (2) of Article Seventy of the regulations, supplies to diplomatic missions from qualified suppliers are subject to a zero percent rate, and the mechanism and conditions for considering suppliers qualified for the purposes of this article are determined by a decision of the governor.


7. Amending subparagraph (d) of paragraph (7) of Article (40), whereby a taxable person who is not obligated to appoint an auditor in the event that he writes off debts from the books can now submit any other supporting documents in accordance with what the regulations require, while previously, it was required to provide a certificate from a licensed and certified public accountant.


8. Amending Paragraph (3) of Article (63). Regard to correcting errors in the tax declaration, the taxable person may now correct the error that results in a tax difference whose net value is less than fifteen thousand (15,000) riyals by amending the net tax in the next return, as it was previously only five thousand (5,000) riyals.


9. Delete paragraph (5) of Article (Seventy-Five), which relates to the non-bindingness of interpretive decisions issued by ZATCA.


Source: Umm Al-Qura newspaper

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