Electronic contracts Webinar

Spreading awareness among our clients is one of our main goals and for that, Andersen in Saudi Arabia had conducted a webinar to discuss electronic contracts

The General Authority for Zakat and Income launched a new service for contracts whose value exceeds 100,000 riyals (concluded between two establishments or between establishments and government agencies), which enables the Authority to verify all contracts validity.

The new service provides many advantages, the most prominent of which is updating the financial details of the contract, documenting all inputs and updates to new or old contracts, in addition to the ability to renew or terminate the contract automatically through the Authority’s online portal.

It is expected that the new service will contribute to reducing the burden of zakat and tax compliance on the taxpayers. Which on the other hand will lead to the increase of the reliability and correctness of the information and details provided in the tax statements; reducing the requirements of the Authority for auditing when the taxpayer is subject to examination, in addition to studying the objections from the taxpayer’s point of view. Also, the service will help to confirm the correctness of the tax reports of supplies submitted, mainly after the tax increase from 5% to 15%.

Electronic contract system

It is an electronic service to facilitate and ease the uploading of taxpayers’ contracts concluded with other parties, whether they are “expenses or revenues”. The service also provides the possibility of updating and canceling contracts, as well as accessing notifications and tasks.

Why does the Kingdom of Saudi Arabia implement electronic contracts?

Electronic contracts have many benefits, and below are some of the most important advantages of e-contracts, but not limited to:

  • Upload contracts electronically without the need to visit the authority’s branches.
  • Disclosure of one or more contracts by uploading as one folder.
  • Increasing the reliability of disclosure of all the decisions and confirming the correctness of revenues and expenditures.
  • Proving the correctness of the tax system for contracts concluded before or after increasing the value-added tax and determining the correct rate for the tax applied to the contract.
  • A guide is provided to handle objections and audit the data by the authority, which will reduce the time and speed up the process of objections assessment and decisions.
  • The taxpayer has the right to amend the filed contracts, add the terms and appendix of the contract, and cancel the contract.

Definition of electronic contract service

It is an electronic platform through which the taxpayer can upload commercial contracts concluded with commercial establishments or government agencies on the General Authority for Zakat and Income website to facilitate transactions with the Authority instead of dealing with paper-based system.

Who is subject to electronic contracts?

Every natural or legal person/body who meets the taxpayer definition of any type of taxes applied in the Kingdom of Saudi Arabia, such as:

  • companies.
  • Institutions
  • Charities
  • Governmental entities
  • Organizations
  • Normal individuals
  • Any taxpayer registered with the Authority and obligated to disclose contracts.
  • All tax and zakat payers.

There are exceptions to some contracts that do not require registration in the service, such as:

  • Contracts whose value is less than one hundred thousand riyals.
  • Commercial and service transactions that take place without prior contracts (direct supply).

The legal framework for electronic contracts

  • All laws and regulations obligated the person charged with the disclosure of contracts concluded with the charitable societies, private, public, government sectors, and others, whose value exceeds 100 thousand riyals.

Contracts must be disclosed directly, with a maximum of 3 months, in the following cases:

  • New contracts.
  • Amendments to the contract.
  • Terminating or stopping the implementation of the contract.
  • Completion of contract.

Also, all previous contracts that are still under implementation must be disclosed, and that will not result in any financial penalties.

How to benefit from the electronic contract service?

The most prominent features of the service are as follows:

  • Register a new contract.

To do this, follow the steps below:

  1. Entering the Authority’s website (the portal).
  2. Choose disclosure of contracts.
  3. Register a new contract.
  4. Selecting the type of contract (revenues – expenses) and the type of the second party (governmental entity, a resident company, a non-resident company, individuals, a company affiliated with the Gulf Cooperation Council countries, endowments, and charitable societies).
  5. Enter the contract details.

a. Mandatory fields:

• Contract number • Brief description • Contract date • Beginning and ending of the contract • Date type (Hijri / Gregorian) • The contract amount • The country of the contract • If the contract is renewable

b. Attach documents

  • Sending the application and obtaining a reference number for the application.

Register new contracts by uploading a file with several contracts

To do this, follow the steps below:

  • Select (Download Contract Registration Forms) from the shortcuts’ list.
  • A window will appear on the page, then choose (Download Contracts Form)
  • Fill out the mandatory fields.
  • To upload the file, the file type must in Excel with a .CSV format and it should not exceed 20 MB.
  • Click on the (Register) icon to complete the contract registration process.

Inquiry about requests

Through the Requests icon, you will be able to know the status of the request at any stage of the request, namely:

1- Awaiting the Authority’s review:

If the request is approved, you will receive:

  • Notice by e-mail.
  • Notice via the mobile number registered with the Authority.
  • Notice through the site’s notification box.

2- Waiting for the approval of the second party.

The second party can review the request on the home page through:

  • Requests
  • To do list
  • Notifications

And upon reviewing the request, he has the right to accept or reject the request.

3- If it is approved

This is the third and last stage for the registration process for a new contract, where the first party finds the contract under the contracts icon and the status will show as “Active”

Update contract information

To do this, follow the steps below:

  • You can update an active contract or an expired contract (provided that the day is less than or equal to the contract closing date). To do that, choose (Update Contract) from the shortcuts’ list.
  • Select the contract that you want to update, then choose (Update Contract) from the list of actions.
  • Update contract details. The following must be modified: date, the reason for modification from the drop-down list, and update clauses under the contract details.

Requests to close contracts

To do this, follow the steps below:

  • Choose the (Contracts) icon from the main page.
  • Choose (Request to Close Contract) from the list of actions.
  • Fill in the mandatory fields: date type (Hijri / Gregorian), contract expiry date, and closing reason.
  • Click on (Send Request), then it will appear under (Requests) and then (Requests for Successful Contracts Closure) will appear in the list. To see the status of the request, press (Requests) from the home page.

In addition to many other available services through the website.

Andersen In Saudi Arabia works with you to ensure that your organization/company is ready for all the requirements of electronic contract service; as it understands your needs in this regard, assesses the status of your organization/company, designs the necessary service requirements, and then implementation.