VAT Return Filing in Saudi Arabia: Due Dates, Process & Penalties

The KSA has implemented the VAT as one of the measures of the economic reform under the vision 2030 reform agenda to diversify its economy. Managed by the Zakat, Tax, and Customs Authority (ZATCA), the VAT ensures that firms take financial responsibility for the nation’s development, and their records are transparent on their transactions. Saudi Arabia VAT registered businesses are supposed to file VAT returns from time to time, VAT Return Filing in Saudi Arabia something that has to be done to the letter to avoid being clobbered. It is important to understand how the filing of the VAT return in KSA work so that business may continue effectively with no hitches in the legal aspect.

The major steps that a business needs to undertake when filing VAT returns in Saudi Arabia include the following; It’s important for businesses to know particular dates on which they should submit their returns, the types of returns used in the business and if there is a mistake how to make the necessary corrections. Therefore, the adoption of e-invoicing in Saudi Arabia has provided more simplification of VAT filings on behalf of the companies operating in Riyadh or across the KSA. This way, businesses can alter may be barred from penalties that may arise from lack of knowledge in the prescribed processes, while the implementation of the required changes is on.

This guide will provide a basic guide to VAT return filing in Saudi Arabia: on timelines for filing returns, the filing through the ZATCA portal, and the implications of late or incorrect returns filing. It will also look at matters such as e-invoicing in KSA’s Riyadh and how KSA is transitioning into a digitalized taxation system. This information will be useful whether you are an experienced business person, or a new one, VAT Return Filing in Saudi Arabia or whether you have recently registered for Value Added Tax in the Kingdom of Saudi Arabia.

What is VAT Return?

A VAT return simply means a legal paper that Saudi Arabian firms complete and submit to ZATCA to declare their VAT compliance obligations. VAT return gives the total value of the VAT charged in the supplies that the business has made to its customers (output VAT) and the VAT that the business has reclaimed on the business purchases (input VAT). The difference of these figures will determine whether a business has to pay VAT to ZATCA or whether the business wants a refund. This systematic reporting ensures the Kingdom meets all the statutory provisions on taxes.

Who Has to File VAT Returns in KSA?

Every person who is registered under the Saudi VAT law has to file the VAT returns. The submission can be done monthly or quarterly depending on their annual turnover. If a taxable person has not carried out any business transactions in a tax period, he must nonetheless submit a “Nil” return for that period in order to satisfy the legal formalities VAT returns in KSA.

Filing Periods and Deadlines for VAT Returns in KSA

VAT returns in Saudi Arabia can be filed monthly or quarterly depending with the annual turnover of the business. Some of the businesses that file monthly VAT return include the following; Business with a turnover that is greater than forty million Saudi Arabian Riyals while businesses with a turnover that is less than forty million Saudi Arabian Riyals file the return quarterly. It is vital because monthly returns are anticipated by the end of the following month, and quarterly returns by the last month of the subsequent quarter.

Turnover More Than SAR 40 million: Monthly VAT Returns

VAT returns that are filed by companies that have an annual turnover of more than SAR 40 million are required to be filed monthly. This makes it possible to frequently and accurately report VAT obligations because of the high turnover of activities in such businesses. Monthly filings enable ZATCA to receive the current status of VAT collections, VAT Return Filing in Saudi Arabia and payment to the Kingdom to ensure compliance with tax laws.

Due Date for Filing VAT Returns

A registered person is required to submit his/ her monthly VAT returns not later than the following month of the tax period in question. For example, the March VAT return should be filed between 1 April and 30 April. This structured timeline helps the businesses to gather and validate their VAT information sufficiently to avoid mistakes and to enable easy submission.

Turnover Less Than SAR 40 million: Quarterly VAT Returns

Any business entity in Saudi Arabia, with turnover up to SAR 40 million is allowed to submit its VAT returns on a quarterly basis. This flexibility is intended to assist the smaller businesses to reduce the number of returns that they make while they observe the correct VAT reporting regime. These businesses can take advantage of the quarterly filings to help them be in a position to manage their resources as well as meet their tax obligations.

Due Date for Filing Quarterly VAT Returns

Quarterly VAT return filers are required to file their returns at the latest by the end of the month following the quarter end. For instance, VAT Return Filing in Saudi Arabia returns for value added tax for the quarter of October, November and December should be submitted between 1st January and 31st January. This extra time is enough for businesses to collect and validate their data and submit correct and timely returns.

VAT Return Format

The Saudi Arabia VAT return form has been developed to affordably provide full details of VAT collected and paid by the taxpayers. It consists of 16 sections, divided into two main parts: output VAT and input VAT. The first part recognizes the VAT on the sale of goods and services while the second part deals with the VAT on all the acquired purchases for business purposes. This structured format facilitates recordation of every transaction so that ZATCA can determine the net VAT amount either payable or refundable for the specific tax period.

Part 1: Sales/Supplies/Output VAT Details

Box 1: Standard Rated Sales

• Amount: The value of goods and services that are sold at 5%VAT in KSA.
  Adjustment: Other accounts for returns and write off of bad debts.

Box 2: Private Healthcare Education First House Sales

• Amount: Sales value of goods and services exported to Saudi Arabia.
• Adjustment: Hedging for goods/services provided for Saudi citizens.

Box 3: Zero-Rated Domestic Sales

• Amount: Amount of goods and services that are sold with 0% VAT in KSA.
• Adjustment: Changes for zero rated sales.

Box 4: Exports

• Amount: Exemption of goods and services exported to a country outside the GCC attracting a zero percent VAT.
  Adjustment: Exporting adjustments of goods and services.

Box 5: Exempt Sales

• Amount: Cost of VAT-exempt goods and services.
  Adjustment: Adjustments for exempt sales.

Box 6: Total Sales: Total sum of the boxes one up to five.

Part B: Account Code Description / Description of Purchases / Input Tax

Box 7: Standard-Rated Domestic Purchases

• Amount: Value of imported goods or services for which 5% VAT has been charged in KSA.
• Adjustment: Adjustments for purchases.

Box 8: Imported goods that attract VAT paid at the customs

• Amount: Value of imported goods or services is charged at 5% import VAT.
  Adjustment: Adjustments for imports.

Box 9: Goods and Services Imported and Brought into the UK for Use Here that are under the Reverse Charge VAT System

• Amount: Value of imports where the supply is treated as made under a reverse charge.
  Adjustment: For reverse charge imports;

Box 10: Zero-Rated Purchases

• Amount: Value of goods and services sold in KSA at a 0% VAT rate.
• Adjustment: The effect of zero rated purchases.

Box 11: Exempt Purchases

• Amount: Exempt goods and services bought in KSA.
• Adjustment: Exemption for certain purchases Adjustments.

Box 12: Total Purchases: Total of the following boxes 7 to 11.

Part 3: Other System generate Fields

Box 13: Cumulative VAT Amount Payable for the Current Tax Period

Box 14: Addenda und Acceda from previous period up to 5,000 SAR

• Enter right quantities for prior mistakes.

Box 15: VAT Credit Carried Forward

• VAT credits that have not been claimed for earlier periods or where refund has not been made.

Box 16: Net VAT Due (or reclaimed)

• The total VAT amount which is recoverable or could be claimed for the current period.

How to e-file VAT returns?

Taxable persons can submit their VAT returns through the ZATCA portal online. The taxpayers have to complete the VAT return form which provides information of the taxpayer, details of the sale of goods /services, amount of the sale, amount of VAT charged, amount of input tax claimed etc. The taxpayer should provide all details on sales and purchases including zero rated sales/purchases, exports, exempt supplies and purchases, VAT Return Filing in Saudi Arabia and imports. Nevertheless, the taxpayer can type nil value in case the section is not relevant or in case no transactions occurred.

Deadline extension for VAT payment

The authority can allow the taxpayers to delay the payment of VAT if they cannot meet the due amount of VAT liability. The taxpayers should provide information including tax amount, tax year and reason for the extension of time limit. The ZATCA is allowed to approve or reject the extension request within twenty days at most.

Amendments to VAT returns

In the case where there is a need to change the already submitted details of the VAT return, all the taxpayers are empowered to use the ZATCA portal to amend the return. However, to alter the VAT return, the taxpayer must meet the following conditions:

• The regulation requires a taxpayer to provide justification for changes made.

• The Necessary annexes to relevant documents are also necessary.

• Taxpayer should also adjust the financial statement.

Furthermore, the taxpayer should correct the tax due (in case the difference is less than SAR 5000 as a result of an error) through the next tax return.

How to change the filing period under KSA VAT?

The ZATCA portal also enables one to switch the VAT return filing period. The KSA VAT has made it mandatory for all the businesses to file monthly VAT returns if their turnover is more than or equal to forty million Saudi Arabian Riyal. Through the portal, VAT Return Filing in Saudi Arabia you can make the request for a change of the VAT filing period. The authority finalises it after a careful consideration of the application submitted to it. The time limit to get the response from the authority is one day to maximum.

Conclusion

Among the essential responsibilities of all the companies that have registered under VAT in Saudi Arabia is the VAT return filing. According to the requirements of ZATCA, legal entities can meet the deadlines and non-compliance with which entails fines, submit the necessary documentation correctly and in compliance with the legislation of the Kingdom of Saudi Arabia. Whether the returns are filed on a monthly or quarterly basis, it is necessary to understand the procedure and time line as well as the requirements that are requisite for efficient handling of taxes. e-invoicing in Riyadh has also improved the VAT processes in Saudi Arabia where the implementation has taken place further assists the organizations to ease their compliance obligations.

Businesses who operate in the Kingdom of Saudi Arabia also know that VAT returns are not only mandatory but also corporate responsibility and an addition to the growth of the kingdom’s economy. At all times it is necessary to obey the rules of ZATCA and take advantage of the existing tools to submit VAT. As a result, VAT Return Filing in Saudi Arabia it amounts to being able to pay attention to growth-related aspects of the business and at the same time, meets the right processes of filing the returns at the right times to address the VAT issues.