The reduction of the value-added tax (VAT) registration threshold in Saudi Arabia to SAR375,000 ($99,960) is estimated to increase the taxpayer base by 150,000, according to KPMG Al Fozan and Partners.
The kingdom introduced the 5% VAT rate on January 1, 2018, but it only applied to businesses with revenues exceeding SAR1m ($266,560) in its first year.
From January 1, 2019, those with revenues of between SAR375,000 and SAR1m have also been subject to the tax. Currently, the kingdom has over 140,000 VAT-registered taxpayers, KPMG Al Fozan and Partners said in a statement.
With the registration deadline having ended on December 20, VAT audits have started and assessments issued for violations such as late registration and filing of VAT returns as well as incorrect declarations.
Penalties include the suspension of some government services and fines ranging from 5 to 25% of the tax owed, according to the General Authority for Zakat and Tax (GAZT).
Under the rules, non-resident taxpayers are also required to appoint a tax representative to act on their behalf and to assume joint liability for VAT debts.
The authority has issued 24 detailed VAT guides on different topics such as financial services, healthcare, telecommunication, the digital economy and real estate to clarify the law and support taxpayers with compliance.
Authorities said in September they had recorded 187 violations of VAT rules by schools, training institutes and bookstores following inspections.
Source Credit: Gulf Business