VAT won’t apply on supply contracts inked before May 30: GAZT

03/12/2017 Argaam

 

Value-added tax (VAT) will not apply on long-term supply contracts signed before May 30, 2017, as companies will enjoy a grace period so they can re-negotiate their old contracts, Saudi Arabia’s General Authority of Zakat and Tax (GAZT) said in a statement.

 

The move comes as GAZT aims to ease the transitional period ahead of levying the VAT.

 

To be eligible for the grace period, clients should be able to fully deduct the contract’s input tax and submit a written certificate to affirm the deduction.

 

Contracts that include a term concerning the tax or that allow amending prices will be excluded from the grace period.

 

VAT will apply on all supply contracts as of Dec. 31, 2018, the statement added.

 

The Kingdom is set to implement 5 percent VAT from January 1, 2018.

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