KSA: Latest amendments to VAT Executive Regulations

On 06/23/2023 (corresponding to 12/05/1444AH), ZATCA Council published Decision No. 01-04-23 dated 11/26/1444 AH corresponding to (06/15/2023) in the Saudi Official Gazette (Umm al-Qura Newspaper-Issue No. (4987). The Decision amends certain provisions of the Implementing Regulations on VAT (revised, added or deleted parts and/or paragraphs), effective from the date of publication.

All the details are available on the following link or using the barcode below:


Amendments effects explained.

  1. Article 8 (8) regarding Registration Application: Online stores were added to business places. The taxable person needs as per this Article to display the registration certificate at their principal place of business, branches, and online stores, making sure that it is visible to the public.
  2. Article 9 (5) about (Registration provisions applying to specific circumstances): the clause was reformulated adding (if all) to clarify applying conditions. As per the amended article, any activity directly exercised by a government body (acting as a public authority) shall not be subject to tax if all of the precited conditions are met.
  3. Article 9 (6) Revised substituting the word (employees) with (workers) to make it more general, for all contracts to be binding, whether regular and informal.
  4. Article 9 (7) New addition. The amendment aims to explain regulations and conditions in paragraph 6 of the same article.
  5. Article 29 (7) regarding financial services: Revisited to expand exempted supplies. As per the amended Article, the provision or transfer of a contract of life insurance, or the reinsurance of a life insurance contract (paid implicitly or explicitly) is an Exempt Supply of Financial Services.
  6. Article 34 (4) regarding the supply of a qualifying means of transport, or of any vessel or aircraft used principally for international transportation of passengers and goods- Revisited. As per the amended version, a certificate must be addressed to ZATCA or to the supplier stating that the supplied means of transport is qualified in accordance with this Article’s provisions. This way the customer can benefit from 0% VAT on qualifying means of transport.
  7. Article 34 (9) Added. Before issuing the certificate (referred to Article 34 (4)) the client must assess whether the supply is qualifying means of transport based on all the criteria mentioned in this Article.
  8. Article 34 (10) Added for the purpose of setting requirements. The main purpose of using the means of transport should be international transport and following specified conditions and percentages.
  9. Article (36) repeated No. 2, (Supplies for Diplomatic Missions): Added clause, to the effect that supplies to diplomatic missions are subject to a zero-rate, provided that the supplies are from qualified suppliers, and the application mechanism, controls and conditions for considering suppliers are specified by a decision of the Governor of the Authority.
  10. Article 40 (7) (d) regarding Adjustment Supply Values. Revisited so that the appointed auditor is exclusively authorized in the Kingdom of Saudi Arabia. When making adjustments on account of bad debts, the submission of other supporting documents from entities which are not required by law to appoint an auditor is allowed by ZATCA.
  11. Article 46. Title revisited. Old title (According to Preparation of VAT return according to Cash Basis) replaced by (Preparation of VAT return according to Cash Basis).
  12. Article 46 (12) New addition exempting government authorities from the most important condition in paragraph 1 of the same article, regarding taxable supplies. As per the amendments, request to calculate the net tax due for the tax period may be submitted on a cash basis (provided that the annual value of Taxable Supplies in the past calendar year does not exceed five million (5,000,000) riyals, Government entities are exempted and will be allowed to subject their taxable supplies on a cash basis provided that they secure prior approval from ZATCA in case yearly supplies exceed the specified amount.
  13. Article 63 (3) (Correcting returns). Revisited to increase the amount of net tax adjustment for a threshold from 5,000 SAR to 15,000 SAR. Registrants and taxpayers can make corrections in VAT returns of the subsequent tax period without penalty.
  14. Article 70 (1) regarding Refund of Tax to designated Persons. Revisited. As per the amendment, designated persons (not carrying on an economic activity or engaged in specific economic activity) are authorized by the Minister of Finance to submit to ZATCA a request to be considered eligible for the purposes of tax refund.
  15. Article 70 (2) Revisited. ZATCA board or delegates may issue or be authorized by the Minister of Finance to issue a list of persons (foreign governments, international organizations, diplomatic bodies and missions) considered eligible to recover the tax.
  16. Article 75 (5) Deleted. The deleted paragraph had a negative impact on those subject to and registered with VAT. It stipulated that “any opinion or ruling issued by the Authority in accordance with this article is not binding on the Authority or any Taxable Person in respect of any transaction carried out by the requesting Taxable Person or any other Person. The provisions of this article shall be without prejudice to the rights of the Authority to issue binding decisions and instructions pursuant to article fifty-two of the Law.” As per the amendment, tax rulings became binding advice. Taxpayers always have the right to dispute a matter upon disagreement with ZATCA.