When the goods are imported by persons residing in Kingdom of Saudi Arabia, the buyers are obliged to pay GAZT (General Authority of Zakat & Taxation) with a reverse payment. Let us understand the methods to be used by both registered and unregistered businesses to pay VAT on imports.
1. Import by VAT registered businesses in Saudi Arabia:
When a business registered in Saudi VAT imports from a non-GCC country, it is obliged to pay VAT to the Customs Department upon receipt of imported goods to Kingdom of Saudi Arabia.
In addition, when a registered business imports goods from a GCC country that cannot provide VAT has been paid in the country of origin, the business must pay VAT to the Customs Department at the arrival of the goods imported to KSA.
Business which has a high volume of imports can apply to pay VAT on imports in the regular tax return, instead of it being collected by the Customs Department. Specific requirements have been set up for businesses to be eligible:
a. The enterprise uses monthly tax period and plans to import goods monthly.
b. The business may prove that all tax returns were submitted in the previous 12 months and the tax payments were made on time. Other obligations related to VAT were also fulfilled. If the business was taxed for less than 12 months, these obligations would have to be met for the relevant period.
c. Sufficient evidence is provided on the continued financial stability of the individual.
Note that the VAT Authority in Saudi Arabia, General Authority of Zakat & Taxation (GAZT) can refuse such an application, where it views that there is a risk that the VAT will not be paid, or where the person has any outstanding obligation with respect to VAT.
The GAZT can also cancel an existing authorization where it views that the person is no longer eligible to be granted the authorization, or by request of the person.
After the approval of payment for import, VAT in the regular tax return is approved by GAZT, the taxable person should inform the custom administration of the approval for the next import declaration.
2. Import by unregistered businesses under Saudi VAT:
If an unregistered business or private person has imported goods from another GCC country and cannot prove that VAT has been paid in the country of origin, then the person must pay VAT to the Customs Department at the time of arrival in KSA.
For this reason, VAT on the import of goods must be paid to the Customs Department by registered and unregistered persons or businesses during import.
However, in the case of a registered enterprise with a high amount of imports, a provision is made for the payment of the VAT during the application for the return.
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