KSA has amended some of the VAT Regulations and issued the mechanism of the private educational sector

Amendments to the VAT Implementing Regulations

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has recently approved a series of amendments to the articles of the Value Added Tax (VAT) Implementing Regulations. Some of the new rules are listed below:

  • Article 8: The VAT registration certificate of a business or a branch 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 specifically by the Article – this will generally affect transactions with the end consumers.
  • Article 63: If the understatement of Net Tax by the Taxable Person is less than SR 5,000, the taxable Person may correct the error by adjusting the Net Tax in its next Tax Return.

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

Mechanism of collecting VAT from the private educational sector

GAZT announced the mechanism by which the government bears the VAT on behalf of Saudi nationals in the private educational sector, as mandated by the Royal Decree No. (A/86) dated 18/4/1439 AH. The mechanism for Saudi and non-Saudi citizens is listed below:

Saudi citizens: Private educational institutions registered in the VAT system are required to issue tax invoices to Saudi citizens for the amount due for the services provided, excluding VAT. The institutions must also confirm the identity of the recipients of the service and include their national identity information on the tax invoices issued to them.

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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