The Zakat, Tax and Customs Authority (ZATCA) has published significant amendments to the VAT Implementing Regulations in the Umm Al Qura Gazette on April 18, 2025. Here’s a summary of the key updates:
- VAT Grouping Rules Rewritten:
- Stricter residency, control, and eligibility criteria for forming VAT groups.
- Existing VAT groups have a 180-day grace period to comply.
- Certain eligible persons, like real estate developers, can no longer be part of VAT groups (with some exceptions).
- Deemed Supply Expanded:
- Use of goods after deregistration is now a deemed supply.
- Supplies made without payment are non-taxable if input VAT wasn’t previously claimed.
- Adjustments required for partially unpaid invoices after 12 months, impacting input VAT recovery.
- Business Transfers (TOGC):
- New strict conditions for transferees to maintain the same activity post-transfer.
- Mandatory reporting to ZATCA within one month of the transfer.
- Reverse Charge for E-Services Clarified:
- Article 47 specifies when online platforms are considered suppliers.
- Platforms may be liable for VAT collection for supplies by non-resident or non-registered suppliers.
- Refund Regime Overhauled:
- Article 70 restructured with quarterly or annual refund periods based on applicant category.
- Stricter documentation and timing requirements; claims must be submitted within 6 months.
- Minimum SAR 5,000 threshold for refund requests.
- Expanded rights for foreign governments, international organizations, and diplomats.
- Customs Suspension and Special Zones:
- Zero-rating for supplies under customs suspension arrangements and movement to/from special zones, with strict documentation rules.
- Tourist Refund Scheme Enhanced:
- Clarified eligibility, excluding food, fuel, and certain personal goods.
- Tourists from other GCC countries remain eligible until e-service integration is complete.
- Expanded Definition of Services (Article 14):
- Services now encompass any non-goods supply, including granting rights, providing access, or licensing intangible rights (e.g., IP, trademarks, copyrights).
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