Export of goods to Non-GCC countries from Saudi Arabia

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Tally Solutions, Feb-04-2020

Exports are an important source of revenue for Saudi Arabia. While petroleum products remain the top exports from the country, other major exports of Saudi Arabia are vehicles, machinery and plastic articles. In this article, let us understand the implications of the levy of VAT on export of goods from Saudi Arabia to non-GCC countries.

Non-GCC countries

The GCC countries other than Saudi are Kuwait, UAE, Bahrain and Oman. When goods are exported from Saudi Arabia to a country other than these GCC countries, the following tax treatment will apply.

VAT treatment of export of goods

Export of goods from Saudi Arabia to a place outside the GCC territory will be zero rated. This means that no tax will be applicable on such supplies. It is a measure that will act as an incentive to businesses involved in export of goods to non-GCC countries.

Conditions for Zero Rated VAT on export of goods

The movement of goods from Saudi Arabia to a place outside the GCC territory will be zero rated, provided the following condition is met:

The supplier of the goods should retain the evidence that the goods have been transported from the GCC territory within 90 days after the date of supply.

Hence, persons exporting goods from Saudi Arabia to a non-GCC country should ensure that the goods are transported from the GCC territory within 90 days after the date of supply. Also, it is important that evidence of the same is retained by the supplier.

This evidence of goods being transported outside the GCC territory should include the following:

What happens if the evidence is rejected?

The GAZT (General Authority of Zakat & Tax) can reject the documentation held by a registered person with respect to goods exported to non-GCC countries. These will be in cases where the documentation does not sufficiently evidence that the goods are being transported outside of the GCC territory. In these cases, the supply will be treated as being made in the GCC territory, until such evidence is obtained. On such supplies, the standard VAT rate of 5% will apply.

Can I input tax VAT be recovered on exports?

Exports from Saudi Arabia to outside the GCC territory are zero rated. Hence, input tax can be recovered on inward supplies used to make such exports.

In conclusion, export of goods from Saudi Arabia to non-GCC countries will be zero rated.

This is on the condition that the goods are transported outside the GCC territory within 90 days from the date of supply. The supplier exporting the goods must also retain the documentary evidence of this.