KSA VAT update – VAT increased from 5% to 15%
The Kingdom of Saudi Arabia (KSA) has increased the Value Added Tax (VAT) from 5% to 15% effective from 1st July this year.
Less than three years from the date of implementation of VAT in the KSA, while some are still getting used to the introduction of VAT, the rate hike has come as a shock to the residents of KSA, United Arab Emirates (UAE), and the Kingdom of Bahrain.
In addition to the above measure, the KSA has announced a halt to the social allowance from 01st June this year.
It is noted from the official statements that the measures are to curb the negative impact of the sudden drop of oil prices due to the COVID-19 pandemic and to maintain the financial stability of the country.
What does it mean to the UAE and Bahrain:
The news proved that the change in the VAT rate does not require updating the GCC framework, or implementing the VAT in all the GCC countries. It set the precedence that a change of VAT rate is the decision of the individual countries.
Though the tax authorities of the UAE and Bahrain have not made any comments about the VAT rate hike, we recommend the businesses and the common man to keep an open mind for the changes in taxation.
Who are we?
Re/think is a boutique accounting, audit, advisory, regulatory compliance, and tax advisory firm with offices in Dubai, Abu Dhabi (ADGM) and Bahrain focused on providing businesses of varying sizes with timely, proactive, and customized business solutions from start-up and early development to the latest stages of a business lifecycle
How can we help?
Rethink as an entity provides VAT advisory, optimization, registration, implementation, compliance, and training services in Bahrain, UAE, KSA, and the GCC.
Our team of senior qualified tax advisors, finance experts, and tax accountants are happy to provide practical help and advice and will ensure timely and cost-effective VAT services.
Based on our local and international experience, we understand that VAT is a complex tax and will certainly suffer numerous changes in the upcoming years. Rethink’s VAT services are aimed to suit both basic and complex returns for SMEs and larger enterprises.
Senior Manager (Indirect Tax)