Saudi Arabia: VAT Guide on electronic stores obligations
18 March, 2021
In brief
The General Authority of Zakat and Tax ('GAZT') published a new guide to help the owners of electronic stores to comply with their duties related to the VAT, and guide them through the VAT compliance requirements (i.e. registration, declaration, payment, etc).
At this time, the guide is available in Arabic language and can be accessed here.
In detail
The highlights of the newly issued guide are mentioned hereunder:
Definition
The Guide defines electronic stores to be digital platforms through which any commercial activity such as sales of goods or supply of services is practiced through the following channels:
- Websites
- Social media accounts (i.e. Twitter, Instagram, Linkedin, Facebook, Snapchat)
- Smart applications
- Instant messaging (i.e. Whatsapp, Telegram,Signal)
Compliance requirements
The guide elaborates on the VAT compliance requirements for electronic stores as follows:
- VAT registration
Electronic stores are required to register for VAT where its annual sales exceed the mandatory VAT registration threshold of SAR 375,000. Voluntary registration can be considered where the annual sales are between SAR 187,500 and SAR 375,000.
The Guide provides information on the steps to follow for registering for VAT purposes.
- Display of VAT certificate
Electronic stores registered for VAT are required to display their VAT registration certificate on the digital platform used. Failure to do so will result in a penalty amounting up to SAR 50,000.
The Guide further provides examples on how to display the VAT certificate on digital platforms.
- Filing of VAT returns
Electronic stores registered for VAT are required to file a periodical VAT return (monthly returns in case where annual turnover exceed SAR 40m / quarterly returns in case where the annual turnover is less than SAR40m).
- Payment of VAT due
Upon filing of the VAT return, an invoice will be issued containing SADAD number to settle the VAT due.
The Guide refers taxpayers to other materials available on GAZT portal for further information:
Key takeaways
Businesses engaged in e-commerce activities are suggested to read this guide carefully to ensure that they are familiar and compliant with the VAT obligations and compliance requirements.
Non-resident persons engaged in e-commerce activities are suggested to assess their VAT registration requirements in the Kingdom in the light of place of supply rules and guidance issued by GAZT.
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Maher ElAawar
Partner, Middle East Indirect Tax and Fiscal Policy, PwC Middle East
Tel: +971 (0) 56 216 1109
Chadi Abou Chakra
Middle East Indirect Tax Network Leader, PwC Middle East
Tel: +966 11 211 0400 Ext: 1858
Ebrahim Karolia
Partner, International Tax and M&A Services, PwC Saudi Arabia
Tel: +966 11 211 0400 ext. 1771
Carlos Garcia
Partner, Middle East Customs & International Trade, PwC Middle East
Tel: +971 56 682 0642
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