VAT in Saudi

Time: July 25, 2018

Unlike in the UAE, 5% tax is applied to any real estate sales transaction

When Value Added Tax (VAT) was introduced in the UAE and Saudi Arabia on January 1, 2018, initially stakeholders were wary on the potential impact of the new tax policy on the economy. While a study by Alliance Business Centres Network revealed that the UAE will be least affected by the imposition of VAT, the introduction of VAT in Saudi Arabia is changing the market dynamics and bringing more transparency to the sector.

A report published by JLL clarifies that VAT is applied to any real estate transaction in the country. The 5 per cent rate is implemented on the sale of a residential, commercial, transfer of ownership of undeveloped land, and the sale of partly completed construction works.

However, rental agreements are exempted from VAT charges, which may impact the sale of new property combined with the 5 per cent VAT on brokerage as buyers may divert from buying new property and instead opt for leasing as an alternative. Cost for leasing, though, may also increase as ancillary services are subject to VAT.

Similar to the UAE, VAT will contribute to the government’s initiatives for economic diversification and continued improvement of public services to the general public.

In conclusion, the above-mentioned views on the potential impact of VAT are only assumptions, since real estate is a long-term product, the real effect of VAT in both countries will be defined further in the coming years.

— Inputs from Al Masah Capital

 

This article was first published in Gulf News

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UAE, Saudi Arabia sign deal to avoid double taxation

May 27, 2018

UAE, Saudi ministers also discuss collaboration on VAT

Dubai

The UAE’s Ministry of Finance signed an agreement with Saudi Arabia for the avoidance of double taxation and prevention of tax evasion with regards to taxes on income and capital.

 

The deal was signed by ministers of finance from each country in a meeting in Jeddah during which the two ministers also discussed other topics including collaboration on the application of agreements regarding Value-Added Tax and selective taxation.

The UAE said the deal on avoiding double taxation is part of efforts to increase investment opportunities and facilitate trade.

 

This article was first published in  Gulf News

If you want more interesting news or videos of this website click on this link  Gulf News Home