KSA: Refund of VAT to designated persons

In accordance with the provisions of Articles 70 and 72 of the Implementing Regulations, persons (including non-resident persons) not carrying on an economic activity in the Kingdom of Saudi Arabia (‘KSA’) who have incurred any VAT during the Financial Year 2018, can apply for VAT refund by June 30, 2019 if all the prescribed conditions are met. The relevant provisions can be accessed through the following link to the Implementing Regulations:

https://www.vat.gov.sa/sites/default/files/2018-01/20180125.pdf

Details:
1. Eligibility

Designated persons who are not carrying on an economic activity in KSA may be considered as an ‘eligible person’ for the purposes of refunding VAT incurred in KSA.

Further, non-resident persons not carrying on an economic activity in KSA, may also apply to be considered as an eligible persons if the following conditions are met:

    a) If the Person is established in a country with a transaction Tax system similar to VAT and is registered for that tax

    b) If there is an reciprocal arrangement between both countries to refund VAT.

2. Application to be treated as eligible person

As per the Implementing Regulations, designated persons fulfilling the above criteria need to file an application with the General Authority of Zakat and Tax (‘GAZT’) to be considered as an ‘eligible person’ in order to file refund of VAT application.As of now, there is no formal process/ mechanism intimated by GAZT in this respect.

In addition to above, Foreign Governments, International Organizations, Diplomatic and Consular Bodies and Mission may also submit an application as prescribed under provisions of Article 70(2) of the Implementing Regulations. GAZT has initiated a process to register such persons through Ministry of Foreign Affairs (‘MOFA’) KSA.

3. Refund of VAT

If the application to be considered as an eligible person is accepted, an individual identification number will be issued to such person which needs to be mentioned on all correspondence with the tax authority.

GAZT has prescribed certain information in sub article 10 of Article 70 which should be mentioned in the refund application to be filed once the person has been granted an eligibility status.

4. Time period

Eligible persons may file refund application for VAT incurred during the financial year 2018 and deadline to file such application is June 30, 2019.

All non-resident persons can only file refund application after end of a calendar year.

Other eligible persons (excluding non-residents) may also file refund application for any quarterly period, however, only one application can be submitted in respect of any quarterly period or calendar year.

5. Restriction

No refund application will be entertained for an amount of VAT less than SAR 1,000.

VAT incurred on goods and services mentioned under Article 50 of the Implementing Regulations will not be refunded.

In case of approval of the application filed, payment will be made in the designated bank account of the eligible person within 60 days from the issuance of notification.

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