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Saudi Arabia: Amendments to the date of supply rules in the VAT Implementing Regulations

11 October, 2021

In brief

ZATCA Board of Directors approved the amendments related to Article 20 “Date of Supply in specific circumstances” of the VAT Implementing Regulations. These amendments will take effect as of 1 November 2021. 

The announcement is published in the official Gazette on 8 October 2021 and can be accessed here.

In detail

The Board of Directors of the Zakat, Tax and Customs Authority (“ZATCA”) on 26/02/1443 AH (corresponding to 3 October 2021) has issued decision no. 21-02-06 approving certain amendments / additions to the provisions of Article 20 “Date of Supply in specific circumstances” of the VAT Implementing Regulations. 

The major changes are summarised as follows:

  • The title of Article 20 is now changed to “date of supply and tax due date in specific circumstances”

  • The date of supply for continuous supply of services where contract stipulates specific payment terms shall be the earliest of the payment due date, actual payment, or date of issuance of invoice

  • In case of periodical installments, the wording of “12 months period” has been added to the initial provisions so the date of supply rule in this case would require the taxpayer to account for VAT at least once every 12 consecutive months

  • Addition of new provisions (parag. 5) related to the special date of supply rules for governmental agencies whereby taxpayers who are engaged in providing supplies to government agencies, according to contracts concluded in line  with the government competitions and procurement processes, would be required to account for VAT at the earliest of (i) the date of issuance of payment order or (ii) the date of receipt of payment, to the extent of the amount received

  • For the last point listed above, ZATCA explicitly states that the new addition does not apply to supplies between a subcontractor and a principal contractor as part of a governmental contract.

ZATCA has also issued a guide to clarify the application of Article 20 and its new amendments which can be accessed here.

In an effort to facilitate taxable persons’ tax compliance and improve their cash flows, the date of supply rules for supplies to governmental agencies as part of procurement contracts shall be the earliest of the issuance of payment order or date of receipt of payment or part thereof and to the extent paid.

PwC Middle East Tax and Legal Services

The Takeaway

Taxpayers engaged in providing continuous supplies should take note of this important amendment and make the required changes in the process flow/ ERP systems in order to avail cash flow relief. Taxpayers should also confirm the status of eligible contracts with the government in accordance with the KSA government guidelines.

Contact us

Mohammed Yaghmour

Middle East Tax & Legal Services Leader, PwC Middle East

Tel: +966 56 704 9675

Yaseen AbuAlkheer

Partner, Zakat and Tax, PwC Middle East

Tel: +966544250540

Chadi Abou Chakra

Partner, Indirect Tax and Fiscal Policy, PwC Middle East

Tel: +966 11 211 0400 Ext: 1858

Fehmi Mounla

Partner, Zakat and Tax, PwC Middle East

Tel: +966 2 610 4400

Fayez Aldebs

Partner, Zakat and Tax, PwC Middle East

Tel: +966 54 400 1037

Suleman Mulla

Partner, International Tax, PwC Middle East

Tel: +966 54 122 8051

Mohammad Hussein Amawi

Partner, Zakat and Tax, PwC Middle East

Tel: +966 55 800 9697

Maher ElAawar

Partner, Middle East Indirect Tax and Fiscal Policy, PwC Middle East

Tel: +971 (0) 56 216 1109

Mohammed Al-Obaidi

Zakat and Tax Leader, PwC Middle East

Tel: +966 50 525 6796

Mohamed Harby

Partner, Zakat and Tax, PwC Middle East

Tel: +966 56 907 2618

Ebrahim Karolia

Partner, International Tax and M&A Services, PwC Saudi Arabia

Tel: +966 11 211 0400 ext. 1771

Wael Osman

Tax & Zakat Partner, PwC Middle East

Tel: +966 13 849 6311

Mugahid Hussein

Partner, Zakat and Tax, PwC Middle East

Tel: +966 54 425 6573

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