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In our previous article 'VAT records in KSA', we learnt about the rules laid down on the manner in which a person registered under VAT should maintain records of their business in Saudi Arabia. We also learnt that a taxpayer can maintain electronic VAT records, provided that certain conditions are satisfied. In this article, let us understand the conditions to be satisfied for a person to be eligible to maintain electronic VAT records.
A condition for maintaining electronic VAT records is that the computer system or server in which the records are maintained should be physically located in Saudi ArabiaKSA. A person who has only a fixed establishment in Saudi Arabia, such as multinational companies, can have their central computer outside KSA. However, such persons should have a computer terminal at their subsidiary in KSA, through which all data and entries regarding the account of the fixed establishment in Saudi Arabia can be accessed.
The data which is entered in the computer system in Saudi Arabia should be in Arabic. Also, this data should be an identical copy of the books of accounts of the person.
The original supporting documents for all the entries in the data maintained electronically should be kept locally in Saudi Arabia.
A taxable person in Saudi Arabia can generate final accounts and balance sheet directly using a computer. Further, in case the person is using a conventional accounting method with computer assistance only for certain account items, all the settlement entries should be provided in Arabic.
A person maintaining electronic VAT records should be able to document the processing system of accounting entries for reference, if it is required by the GAZT (General Authority of Zakat & Tax). The person should also ensure adequate security measures and controls for the data, such that it can be reviewed and examined to prevent and detect tampering of the data. The GAZT may review the systems and programs used by a taxable person to prepare computerised accounts, if it is found to be necessary.
A taxable person can appoint a third party to comply with the records storage requirements. However, it is important to note that the taxable person will still remain directly responsible in all compliance matters.
A non-resident taxable person in Saudi Arabia who has no establishment in Saudi, should appoint a tax representative. The tax representative will be responsible for maintaining the invoices, books, records and accounting documents of the non-resident taxable person.
Hence, while the GAZT has permitted the recording and storage of VAT records using electronic means, taxable persons in KSA should be aware about the above necessary conditions to be satisfied in order to maintain electronic VAT records. These conditions are also a useful benchmark to evaluate and select an appropriate software to ease your compliance activities under VAT in Saudi Arabia.