VAT Payment on Import of Goods under Saudi VAT

Tally Solutions, Feb-04-2020

When goods are imported by persons residing in KSA, the recipients are liable to pay tax on reverse charge to the GAZT (General Authority of Zakat & Tax). Let us understand the methods to be used by businesses, both registered and unregistered, to pay VAT on imports.

Import by VAT registered businesses in Saudi

When a business registered under Saudi VAT imports goods from a non-GCC country, it is liable to pay VAT to the Customs Department upon the arrival of the imported goods to KSA. Also, when a registered business imports goods from a GCC country and it cannot prove that VAT has been paid in the originating nation, the business has to pay VAT to the Customs Department in KSA, at the time of arrival of the imported goods in KSA.

Business which have a high volume of imports can apply to pay VAT on imports in the regular tax return, instead of it being collected by the Customs Department. Certain conditions have been laid down for businesses to be eligible for this, which are as follows:

• The business uses the monthly tax period and intends to import goods at least on a monthly basis
  
  
• The business can prove that in the previous 12 months, all tax returns have been filed and tax
  payments have been made on time. Other obligations in respect of VAT have also been met. If the business has been a taxable person for less than 12 months, these obligations should have been met for the relevant period
  
  
• Sufficient evidence of the person’s continuing financial stability is provided

Note that the VAT Authority in Saudi Arabia, General Authority of Zakat & Taxation (GAZT) can refuse such an application, where it views that there is a risk that the VAT will not be paid, or where the person has any outstanding obligation with respect to VAT. The GAZT can also cancel an existing authorization where it views that the person is no longer eligible to be granted the authorization, or by request of the person.

Once the authorization for payment of import VAT in the regular tax return is approved by the GAZT, the taxable person should notify the customs department of the approval prior to making the next import declaration.

Import by unregistered businesses under Saudi VAT

When an unregistered business or a private individual imports goods worth more than SAR 10,000 from another GCC country and cannot prove that it paid VAT in the originating country, the person has to pay VAT in KSA to the Customs Department, at the time of arrival of the imported goods in KSA.

Hence, VAT on import of goods has to be paid by registered and unregistered persons usually at the time of import to the Customs Department. However, in the case of registered business which have a high volume of imports, a provision to pay import VAT at the time of return filing has been given.