JEDDAH: The General Authority of Zakat and Tax (GAZT) on Wednesday confirmed that interest or lending fees charged with an implicit margin for finance will be exempt from value-added tax.
The authority clarified that interest or lending fees charged on loans, credit cards, mortgages, finance leasing, hire purchase products and transformations are all exempted from the VAT.
Officials of GAZT shared this information during a workshop held at its offices in Jeddah. A number of media professionals and officials of the authority attended the event.
Quashing rumors about ATM withdrawals, the GAZT officials told the workshop that customers will not be charged for withdrawing or transferring money from their accounts using ATMs.
However, the 5-percent tax will be imposed on banks’ administrative charges such as the issuance of checkbooks, statements of accounts and safety deposit boxes and the customer will have to bear this expense.
Moreover, rental prices of residential properties, life insurance contract and issue or transfer of a debt security, equity security, or any other transferable document recognizing an obligation to pay a monetary amount to the bearer are also exempt from the VAT.
According to VAT Project Manager Hmood Al-Harbi, zero-rated taxable supplies include medical products and equipment, exports outside GCC region, international transport, the supply of gold, silver and platinum investments, and services provided to non-residents like tourists and pilgrims.
“The value-added taxes that tourists or pilgrims pay will be refunded, laws for that are there in the executive regulations of the VAT, and they will be soon applied. We hope that the necessary regulatory structure will soon be ready, but we cannot give specific timing yet,” said Al-Harbi.
Moreover, government services like issuance of passports and driving licenses are also exempted from the VAT.
Source Credit: Arab News