Value-added tax (VAT), which will be introduced in Saudi Arabia next month, will not apply to interest or lending fees charged on loans, credit cards, mortgages, finance leasing, hire purchase products and transformations, Arab News reported, citing a General Authority of Zakat and Tax (GAZT) official.
According to the official, who was speaking at a workshop in Jeddah, customers will also not be charged VAT for withdrawing or transferring money through ATMs.
The tax will, however, be imposed on the issuance of chequebooks, statements of accounts and safety deposit boxes by banks, which will be borne by the customers, he added.
Rental prices of residential properties, life insurance contract, issue or transfer of a debt security, equity security, or any other transferable document, recognising an obligation to pay a monetary amount to the bearer, will be exempt, the newspaper said.
Some zero-rated taxable supplies include medical products and equipment, exports outside GCC region, international transport, supply of gold, silver and platinum investments, and services provided to non-residents such as tourists and pilgrims, the report said, quoting VAT project manager Hmood Al-Harbi.
“The VAT that tourists or pilgrims pay will be refunded. Laws for that are there in the executive regulations of the VAT, and they will be soon applied,” Al-Harbi said.
Additionally, government services such as the issuance of passports and driving licenses also fall under exempted category.
Last month, the GAZT had warned that entities were not entitled to collect VAT or issue-related invoices ahead of January 1, 2018, and that the violators could face penalties or fines.
According to data compiled by Argaam, VAT will be imposed on the difference between the cost and sale price. It is an indirect tax that will apply to all services and products except for the items exempted by law.
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