VAT Rate impact on the purchase before and after 1st July 2020

VAT Rate impact on the purchase before and after 1st July 2020 detailed guide has been released by the General Authority of Zakat and Tax (GAZT). Saudi Arabia recently announced that from 1st July 2020, 5% VAT will be increased to 15% but to remove any confusion on contracts and purchases, a guide has been published. More details and guide below.

VAT Rate impact on the purchase before and after 1st July 2020

The interactive guide by GAZT explains the purchases in detail. It also explains the offices, business, and contractual impact of the change. However, the most important part to focus on here is the transition period.

Important Clarifications	Date
Effective date of VAT rate increase to 15%	1 July 2020
Decree issuance date (Effective date of transitional measures)	11 May 2020
End date of transitional measures	30 June 2021
Continuous supplies	Supplies that partially executed before 1 July 2020, and partially executed on or after 1 July 2020

VAT Update by General Authority of Zakat and Tax

So hopefully, the above guide will further clarify and empower the customers with the knowledge they were looking for. Read this carefully and report any issues to GAZT or competent authorities if you face any issues.

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