Checklist for Input VAT Deduction

Tally Solutions | Updated on: August 23, 2023

Checklist for Input VAT Deduction in Saudi Arabia

Supplies eligible for input tax deduction

Taxable supplies within Saudi Arabia

Imports from other GCC States

Imports from non-GCC States

Supplies ineligible for input VAT deduction

Any form of entertainment, sporting or cultural services

Catering services in hotels, restaurants and similar venues

Purchase or lease of restricted motor vehicles. ‘Restricted motor vehicle’ is any vehicle designed to be used on the road, which is not used exclusively for work purposes or is intended for resale

Repair, alteration, maintenance or similar services on restricted motor vehicles

Fuel used in restricted motor vehicles

Any other goods or services used for a private or non-business purpose

Note: If any of these supplies are directly supplied by the taxable person onwards to another person, input tax is allowed to be deducted on these supplies

Time to claim input VAT deduction

If the business uses the accrual accounting method, input tax deduction should be claimed in the tax period in which the invoice for the supply is recorded

If the business uses the cash accounting method, input VAT deduction should be claimed in the tax period in which the payment for the supply is made

Maximum time for claiming input VAT deduction is 5 calendar years after the calendar year in which the supply takes place

Documents for claiming input VAT deduction

Tax Invoice

In the case of imports, the customs document proving the import of goods

Goods that are lost, damaged or stolen should be reported as such in the accounting records. In addition, police reports and insurance claims documentation may be required

Input VAT Deduction is the heart of compliance under VAT in Saudi Arabia. The provision of input tax deduction to persons registered under VAT ensures that a product or service is taxed only on the value added to it and hence, avoids double taxation in the supply chain. There are various factors that influence a person’s eligibility to claim an input tax deduction on inward supplies. This checklist can be used by registrants to ensure that input tax deduction is being claimed on eligible supplies and in the required manner.

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