KSA VAT IN A SNAPSHOT For Private Circulation Only
Legal Framework Understanding VAT Model A Quick Guide to VAT Registration Rates and Input Credit Mechanism What is Supply? Intra GCC Transactions VAT Periodical Compliance Transition for Ongoing Contracts VAT Impact Areas VAT Implementation Roadmap KSA VAT Preparedness VAT & GST Implementation Success Story VAT Advisory
Legal Framework for VAT in KSA GCC AGREEMENT (finalized and published) VAT LAW (final law published) VAT IMPLEMENTATION REGULATIONS (final regulations published) TAX RULINGS (as and when required) Sets broad principles and some mandatory elements for VAT in GCC Each state responsible for its own implementation and enforcement Primary legislation for VAT in KSA which gives effect to GCC agreement Sets out implementation and compliance enforcement framework for VAT Secondary legislations which provide additional rules and laws for interpretation of GCC Agreement and VAT law
Value Added Tax (VAT) Model Manufacturer (SAR 10000 + VAT 500) SAR 500 SAR (12100+605) Consumer (Landed Cost SAR 12705) Distributor (SAR 11000 + VAT 550) SAR 50 (550-500) SAR 55 (605 550) Retailer (SAR 12100 + VAT 605)
VAT Impact in KSA Sales Price VAT @ 5% VAT Credit Tax to the Government Manufacturer to Net Taxable Price 10000.00 500.00 500.00 Distributor Distributor to Net Taxable Price 110% 11000.00 550.00 500.00 50.00 Retailer Retailer to Net Taxable Price 110% 12100.00 605.00 550.00 55.00 Consumer Dealer Total 1655.00 1050.00 605.00
Registration Mandatory Article 3 & 4 Voluntary Article 7 Person has residence in State/ Implementing State a) Total Value of All supplies exceed the Mandatory Threshold (SAR 375000) b) Anticipated that above Threshold will exceed in next 30 Days Person does not have a place of residence If he makes A) Supplies of goods or services and B) No other person is obligated to pay the due tax on these supplies No threshold limit a) SAR 187500 b) Value of Supplies not exceeded but expenses incurred exceeded voluntary threshold limit Threshold limit for mandatory registration as per article 50/51 of GCC Agreement
Rates and Input Credit Mechanism 5% Input Tax Deductible Standard Rate 0% Input Tax Deductible Exports of Goods from KSA (Article 32) Services Provided to Non-GCC Residents (Article 33) Transportation services for Goods or passengers outside the Kingdom and Supplies relating to transportation (Article 34) Medicines and medical equipment (Article 35) Exempt Non Deductible Finance Services including Life Insurance (Article 29) Lease or license of Residential Real Estate (Article 30) Out of Scope (Entities + Type of Transactions + Supplies) GOVT Or activities of Government and Public authorities (article 9) Employer, Employed or contracted persons where there is relation of employer & employees with remuneration (article 9) Transfer in the same entity or group entity (article 18) Issue or Supply of Voucher (article 19)
What is Supply? Supply of Services Article 6 of Law Article 5 of GCC Agreement Supply Exempt Supply Supply of Goods Supply of Goods Means Transfer of Ownership Transfer of right to use Deferred transfer of ownership Deemed Supply Supply (Article 14 of the regulation) Supply of Goods Supply of Services Reverse Charge Mechanism Imports in the state
Intra-GCC Transaction World Including Non Implementing states of GCC region KSA Local Sale KSA VAT Implementing States GCC Region UAE Unregistered Suppliers Suppliers Local Purchase KSA VAT Branch Transfer No Tax Intra GCC sale KSA VAT UAE VAT payable by Importer Intra GCC sale Registered Dealer Import Purchase KSA VAT payable by Importer Zero Rated Export Sale You KSA VAT payable by Importer Intra GCC purchase Suppliers
VAT Periodical Compliance (Article 58 of Regulation) Upto SAR 40MM Above SAR 40MM Filing frequency : Quarterly First filing period : Jan-Mar 2018 First filing deadline : 30-April 2018 Filing frequency : Monthly First filing period : Jan 2018 First filing deadline : 28-Feb 2018
Ongoing Contracts (Article 79 of the VAT Regulation) 1 st May 2017 1 st Jan 2018 31 st Dec 2018 31 st May 2017 VAT is applicable from appointed date 15 th April 2017 1 st Jan 2018 31 st Dec 2018 VAT is Zero Rated VAT is Applicable * This Zero Rating can only be done if the customer provides a written certificate that Input Tax is able to be deducted or refunded in full on the supply
VAT Impact Areas Supply Chain Tax & Finance Assess costing Re-design processes Sales & Marketing Collect customer vat data Restructure at existing contracts Human Capital Re-skill / recruit / outsource Assess and change the division of Responsibility with respect to vat IT Systems complete registration formalities Plan for transition to new law Plan for the change in cashflow Design compliance calendars Add relevant tax clauses in relevant agreements Validate critical documentation and formats Update vat data in vendor/ customer Masters Update inventory masters with Tax class and rates Develop document formats for Invoices / debit note / credit notes Design relevant statutory Reports for vat filing and record Keeping
Roadmap for VAT Implementation Activity PHASE-1 Impact Analysis As is Study Suggesting Tax Optimization Scenarios Drawing Change Management Roadmap PHASE-2 Implementation Registrations Policy and SOPs Team Training System Integration support PHASE-3 Post Implementation Support Day to day queries Handholding team through 3 monthly cycles of VAT filing from an offshore basis Key Outcome Impact in costing / pricing / cashflow due to VAT Objective decision making for optimizing the tax impact Approved implementation roadmap Clear operating guideline Team sensitization ERP requirement mapping ERP User Acceptance Testing (UAT) Compliance Assurance Online issue resolution System related feedback generation Impact Analysis Implementation Post Implementation support Dec. 2017 Dec. 2017 1 st Jan. 2018 Feb., Mar., April 2018
VAT Preparedness Health Checkup VAT Preparedness Analysis Analysis Business Model Review Revenue Model Review Procurement Model Review Key Contracts Review Training On Boarding Workshop Workshop on Implementation Handling Q & A Reporting (Issues and Suggestions) Clarity about Transaction System Readiness People Readiness Team Have worked with various Industry tier Good presentation skills Analytical Skills Grip on VAT or Indirect Tax laws
VAT Enterprise Compliance Generation of relevant VAT reports from ERP Sense check the VAT aspects in transactions Compute the VAT liability and generate payments advice Close accounts in ERP Upload returns and track pending status Develop of reports for the management and accounting entries Experts with through Domain knowledge of VAT Detailed templates & process flows, Helpdesk support Compliance Experience & Software Tieups
VAT & GST Implementation Success Story Multi-Nationals Trading and Distribution Manufacturing and Ancillaries VC / PE Funded Banking Logistics Healthcare Construction and Real-estate Family Owned SAAS Engineering Hospitality Broking e-commerce Startups Small and Medium Large
CA Mitesh Katira Partner APMH Profile Brief Mitesh is a Chartered Accountant and a ISA qualified with specialisation lies in Business Advisory Services with more than 15 years of experience. Mitesh has been focusing on Internal Audits, Compliance Outsourcing and GST implementation. He has been helping corporate and Multinationals on GST Impact Analysis, Implementation and Compliance. Mitesh has been convenor for Information Technology Committee of the CTC i.e., Chamber of Tax Consultants. He is also a part of IT committee of the WIRC of ICAI. He has been assisting a diverse range of businesses with the implementation of VAT in the GCC mainly handling VAT implementation projects in Damman and Kingdom of Saudi Arabia (KSA). He has also visited UAE, Khobar, Dammam, Jeddah and Riyadh for understanding the VAT implementation issues of various industries, multinationals, hospitals, hotels, real-estate companies in this region. Specializations VAT Implementation VAT Transaction advisory VAT compliance outsourcing Corporate Training Process Implementation Education and Certifications Chartered Accountant DISA - ICAI FAFP ICAI Certified trainer india GST by ICAI CA Pranav Kapadia Partner APMH Profile Brief Pranav s expertise lies in GST Consulting,GST Advance Ruling, GST Transaction Advisory and GST Classification Consulting. He has been an expert consultant to large corporates with presence in Multiple States with complex structures in the Indirect Tax. Pranav lucidly deals in complex legal matters like Works Contracts (WCT), DDQ (Determination Disputed Question) now called Advance Ruling (AR), Assessments and Appeals related to VAT and Allied Tax Laws. Pranav is also an expert consultant on VAT for Corporates and Multinationals in GCC region, mainly Saudi Arabia and UAE. He is the President of The Goods & Service Tax Practitioners Association (GSTPAM) of Maharashtra. Pranav is also part of the Indirect Tax Research Committee of the WIRC of ICAI. He has been past Chairman of Indirect Tax Committee of The Chamber of Tax Consultants for 2014-15 and past Convenor of Ghatkopar CPE Study Circle of ICAI. Pranav has addressed various seminars and lectures on MVAT and CST & GST at the GSTPAM, Chamber of Tax Consultants, WIRC Study Circles of ICAI and various Industrial Associations in Mumbai and across Maharashtra. Specializations VAT Advisory VAT Opinion VAT Advance Ruling Education Chartered Accountant DISA - ICAI
CA Atul Mehta Senior Partner Profile Brief Atul focuses on accounting and taxation practice of the firm. He has exposure of more than 17 years in accounts outsourcing and tax advisory side with a specialization in GST Compliance His expertise lies in consultancy, opinions and Tax Planning for Corporates and Individuals. Atul can lucidly handle complex audits, advisory and assessment matters issues related Works Contract matters, CENVAT Credit Rules, Point of Taxation (POT) Rules, Point of Provision of Services (POPS) Rule and so on. Currently Atul is a Convenor for Indirect Taxation Committee of the Chamber of Tax Consultants. He has led the Ghatkopar CA CPE Study Circle of WIRC. Atul has Conducted Training Session organized by WIRC-ICAI and has served at WIRC ICAI Committee for Research and Development and Direct Tax Committee. Atul is appointed as the Vice Chairman of CTC IDT Committe of India. Specializations VAT Compliance Education Chartered Accountant DISA - ICAI CA Amlesh Gupta Manager APMH Profile Brief CA Amlesh Gupta is a Chartered Accountant by profession with more than 5 yrs of experience in Tax Advisory services mainly consisting of GST Implementation and Enterprise Compliance India VAT, Service Tax, Withholding tax and GST Compliance.Amlesh has been handholding India GST Impact Analysis and GST Implementation for various service industries while India went live with GST on 1st July 2017. Apart from domain knowledge, Amlesh has brief understanding of IT Systems, Project Management and Training Skills. Amlesh has been understanding, learning and tracking development in VAT Laws and Regulations in Saudi Arabia and other GCC Countries. Amlesh has extensive knowledge and experience in handling VAT implementation in Dammam, Kingdom of Saudi Arabia (KSA) and is currently handling a huge project in Dammam. Specializations Tax Advisory VAT Compliances & Consulting GST Implementation, Compliance and Consulting Tax Technology Education B.Com Chartered Accountant
Mehul Pawani Senior IT Consultant APMH Profile Brief Mehul is an IT enthusiast with deep understanding about functional aspects of software applications computer systems, networking along with background of accounting and finance. Mehul has been attending various workshops and trainings on data analytics, excel, ethical hacking, cyber forensic, excel and so on. With his ability to understand IT and money trails ie, accounting quickly. Mehul is an expert in systems audit, vulnerability testing, application implementation, etc. Mehul has been important part of IT team of APMH for more than 3 years. Mehul has been helping a hospital in Dammam, Saudi Arabia as well as an Education Group in the UAE to adopt their ERP both billing system the GL system to the requirements of the VAT. Specializations VAT IT Implementation Process Consultant CA Pratik Mehta VAT Consultant Profile Brief Pratik is a qualified Chartered Accountant from the ICAI. He is been in the field of Indirect Taxation for more than 5 years. He has worked with various corporates and multinationals with regards to VAT, Service Tax and now GST. Pratik has been doing consulting, training and implementation of Indirect Tax Laws in varied industries like financial services, trading, manufacturing, education and so on. Pratik has been learning and implementation UAE VAT for a large education group based in Dubai. Specializations Tax Advisory VAT Compliances & Consulting Tax Technology Education B.Com Chartered Accountant
Get in Touch Mumbai : D-613/614, Neelkanth Business Park, Opp. Near Railway Station, Vidyavihar(W), Mumbai - 400 086. +91-22-2514-6854 / 55 / 56 / 57 / 58 +91-9833777556 info@apmh.in www.apmh.in Saudi : +96-6547300622 mitesh@apmh.in www.apmh.in Disclaimer: Content published in this book is based on the VAT Acts, Rules and notifications from other sources believed to be reliable, but no representation or warranty is made to its accuracy, completeness or correctness. This is to simplify the legal provisions and procedural aspects of of the law keeping in mind a basic businessman and their accounting team, with the helps of simpler language and graphical representation and so may result into error or omission or interpretation differences. This document is not intended to be a substitute for professional, technical or legal advice or opinion and the contents in this document are subject to change without notice. Whilst due care has been taken in the preparation of this presentation and information contained herein, APMH accept any liability whatsoever, for any direct or consequential loss howsoever arising from any use of this document or its contents or otherwise arising in connection herewith. Date of Designing : 27/10/2017