Saudi Arabia Imposes 5% VAT on Petrol


Recently the Saudi Arabia’s General Authority of Zakat and Tax (GAZT) has said “The VAT rate of five percent for petrol will be applied starting January 1, 2018.” In its explanation to implement tax, the authority told that it will charge local transport of passengers within the kingdom at rate of 5%. The onus for collecting and depositing the same lies with businesses that shall issue travel ticket to the passengers.

An exemption is offered to international transport of passengers and goods as envisioned under the unified VAT Agreement for the Gulf Cooperation Council and the VAT implementation regulation. All of the said person will be zero-rated.

Moreover services like excess baggage, seat reservation fees, maintenance, repair and modification of qualified international transport, custom clearance fees and many other ancillary services shall be included in the purview of the exemption.

Transaction of personal nature such as deposition or withdrawal of cash, car deals between individuals and sale of car to garages will also enjoy the exemption under the VAT policy. Other non-commercial transactions such as sale of residential properties between first degree relatives and its rental services offered to them will also be excluded.

GAZT has rolled out a transparent policy that describes the imposition of such tax on at each stage of the supply chain from the production and distribution to the final sale of goods and services. It was observed that VAT will boost revenue for the government to energize its depressed economy.

Source: Gulf News

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