When the goods are imported by a person residing in the KSA, buyers are liable to pay taxes by reverse payment to General Authority of Zakat & Tax (GAZT).
Let us understand the methods to be used by both registered and unregistered enterprises to pay VAT on imports in kingdom of Saudi Arabia.
- Import by VAT registered enterprise in Saudi Arabia
When a Saudi VAT registered business imports goods from a non-GCC country, it is obliged to pay VAT to the Customs Department upon arrival of the imported goods to the KSA.
Furthermore, when a registered company imports goods from a GCC country but fails to prove that VAT is paid in the country origin, then the business needs to pay VAT to the Customs Department for the goods imported in KSA.
Businesses with high imports may apply to pay VAT for the imports of normal tax returns, rather than being charged by customs duties. Certain conditions have been established for businesses to be eligible for this:
- Business uses monthly tax period and plans to import goods at least on monthly basis.
- The business organization may prove that all tax returns have been submitted and that tax payments have been made on time in the previous 12 months.
- Sufficient evidence is provided of the person’s continuing financial stability.
Note that the VAT Authority in Saudi Arabia may refuse such an application if the General Authority for Zakat and Taxation (GAZT) believes that it is at risk of non-payment of VAT or has any unpaid obligations to the individual.
GAZT may also revoke an existing authorization which it considers to be no longer permitted or at the request of the person that it is not eligible.
After the authorization of the import VAT payment for regular tax returns is approved by GAZT, the taxable person must notify the approval customs authority before making the next import declaration.
- Import by unregistered businesses under Saudi VAT Law
When an unregistered business or private person imports SAR 10,000 goods from another GCC country and fails to prove that VAT has been paid in the country of origin, the person must pay VAT in KSA.
For this reason, VAT on imports of goods should generally be paid to the Customs Department by registered and unregistered persons at the time of import.
However, in the case of a registered business with a high amount of imports, a provision has been made for the payment of import VAT at the time of application for returns.