Zakat, Tax and Customs New Mechanism Takes Effect

Zakat, Tax and Customs Authority started implementing the new mechanism for entitlement of value-added tax on establishments contracting with government agencies, after the authority’s board of directors issued a recent decision approving the amendment of the provisions of Article (20) of the VAT executive regulations, related to determining the date of supply and tax entitlement, in specific cases.

The amendment made to the regulation includes changing the date of supply and the entitlement of value-added tax, on all supplies of goods or services, that are made from establishments contracting with government agencies, according to contracts concluded with those agencies, and in accordance with the government competition and procurement system.

Adding, that is in order that the tax due date shall be the date of issuance of the special payment order claim related to taxable supplies, in accordance with the procedures of the competition system or the date of receiving the consideration for the supply or part of it, whichever is earlier, in order to ensure that an establishment receives the tax due on the supply, before declaring it and paying it to the authority, in its periodic returns.

The authority has held several awareness workshops on this amendment, since the first day of the issuance of the amendment decision, in collaboration with government agencies, the business sector and the Federation of Saudi Chambers.

That is in order to clarify all the details related to the amendment and the desired goals of it, as the authority confirmed that this decision falls within the framework of keenness to ensuring the compliance of these establishments with the provisions related to the value-added tax system, in addition to ensuring the continuity of the activity of taxpayers contracting with government agencies.

The authority had recently launched the simplified guide to amending the tax treatment of supplies made by establishments, for the benefit of a government entity, in accordance with the government competition and procurement system, as well as fines and scope of application.

It also called on all those wishing to obtain more information regarding this amendment, to contact it, on the unified number of the call center (19993), operating 24-hour a day, 7-day a week, or via e-mail to info @zatca.gov. sa or the “Ask Zakat, Tax and Customs” account on Twitter (@zatca_care), or through instant conversations via the authority’s website (zatca.gov.sa).