Saudi Arabia on Sunday said it will levy 15 percent value-added tax (VAT) on products bought through online platforms outside the kingdom.
The Saudi customs authority said in a tweet that this new rule will be applicable to all those products shipped on or after July 1, 2020.
On May 11, Riyadh had announced increasing VAT three-fold from five per cent to 15 per cent with effect from Wednesday, July 1. The kingdom would also suspend cost of living allowance from next month in order to shore up state finances, which have been battered by low oil prices and the coronavirus. The revised higher VAT rates will be applicable to all supplies of taxable goods and services in the country.
Saudi Arabia implemented five per cent VAT from January 2018 as part of wider GCC framework. The UAE, however, reiterated last month that it has no plans to hike VAT for now.
Anurag Chaturvedi, managing partner, Chartered House Tax Consultancy, explained that all imports on or after July 1 shall be subject to 15 per cent VAT.
"In case the online order placed before June 30, 2020 is delivered to the buyer after June 30, then 15 per cent VAT will apply on the selling transaction, whereas the seller should issue an additional tax invoice pertaining to the difference of the applicable tax due," said Chaturvedi.
He added that e-commerce companies should ensure to collect additional 10 per cent from the buyer if the products will be delivered to the buyer on or after July 1, 2020 because they have to pay 15 per cent VAT at the time of custom clearance of the goods.
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