RIYADH — The General Authority of Zakat & Tax (GAZT) clarified that exports from Saudi Arabia are zero-rated under the VAT Law and Implementing Regulations. As such, in-Kingdom enterprises which export goods and services are entitled to deduct the VAT-eligible input taxes they paid, provided they file their tax returns as required.

GAZT further noted that the provision of zero-rating exports is one of many incentives given under the VAT and Implementing Regulations to enterprises that export goods and services and allows them to deduct the tax they paid on those exports.

According to Article 32 of the regulations, in order to apply the zero rate, the supplier of those goods and services must retain evidence that they have been transported from the GCC region within 90 days after the supply has taken place.

As a transitional period, all intra-GCC supplies will be considered zero-rated until VAT is officially implemented in the remaining member nations and the central GCC-wide electronic VAT system is established.

All exporting enterprises must retain the relevant documents issued to them, including those issued by Saudi Customs which prove that the supplies have been formally cleared for export on behalf of the supplier or customer for each supply, commercial documents which contain the customer’s information and place of delivery, as well as transport documents that show that the delivery or receipt of the supplies outside the GCC region.

GAZT may reject the documents filed by the enterprises in cases where they do not sufficiently prove that the supply was indeed transported outside the GCC region, in which case the standard 5% VAT rate will apply to that particular supply.

On a related note, GAZT issued a reminder to all enterprises registered in VAT whose value of annual supplies exceeds SR40 million to file their tax returns on a monthly basis, as stipulated by the VAT Law and Implementing Regulations.