Government Tax – Are You VAT Ready?


News     November 29, 2017

VAT (Value Added Tax) is actually a consumption tax that is imposed on goods and services at every stage of the customer cycle. There are a lot of benefits but businesses and organizations find it quite challenging for their business growth. It automatically increases the cost production for any product form its complete manufacturing procedure to the final delivery. VAT is going to support businesses in avoiding their financial difficulties. If an organization wanted to be VAT ready, they should be fully prepared and plan with an effective Point of Sales Software.

How to Check If You Are VAT Ready?

To be a VAT ready organization, there are different points that need to be considered in order to avoid any concern.

  • Integration of a strong data storage system that ensures your data security.
  • Smart administrative modifications through new hiring or some effective software solution.
  • Conduct an organizational audit
  • VAT registration because it only is imposed by VAT registered organization.

What Is Actually VAT Procedure?

The procedure of VAT is competitively direct. If someone makes a purchase form a VAT registered company they will pay this tax. In the same way, if a business or an organization is buying products from a supplier they need to pay VAT tax accordingly. It simple words Value Added Tax normally endured by the customer and there is no recovery tool available. NextTotal enable VAT implementation as well as tracking in a smooth flow.

What is VAT Registration?

Taxable person/business should register to the VAT, a dedicated account number will be issued to them accordingly.

There are three times of registration being offered within Saudi Arabia.

Mandatory Registration

If an organization is making a taxable supply of products more than SAR 375,000 annually. They need to get register for VAT until 20th December 2017. If their annual supply doesn’t exceed SAR 1,000,000 they are exempted from the mandatory registration until 20th December 2018.

Voluntary Registration

Businesses make an annual taxable supply in excess of SAR 187,500 are qualified for voluntary registration. This type of registration is beneficent for the organizations in maintaining their business relationship and input tax deduction.

Registration of taxable persons not Resident in Saudi Arabia

The ones who are non-resident or haven’t permanent business within Saudi Arabia are required to register if they responsible to pay VAT there.

What information is required for VAT registration?

It requires two type of registrations that are personal and tax information.

Personal Information

The following information is essentially required for this section:

  • Name
  • Mobile Number
  • Email Address
  • Identification Number
  • Saudi Arabia (KSA) Residency

Tax Information

The information related to tax is further divided according to the taxpayer’s type.

Individual Taxpayer:

Individual Taxpayer needs to share the followings:

  • ID type
  • ID number
  • Date of Birth
  • Commercial ID type
  • Commercial ID number (CR)
  • Estimated VAT sales value over the next 12 months
  • Estimated VAT expenses over the next 12 months
  • Sales value over the last 12 months
  • Expenses over the last 12 months

Company Taxpayer

A company taxpayer will provide:

  • Company ID
  • KSA Shareholder
  • Commercial ID type and number (CR)
  • Estimated VAT sales value over the next 12 months
  • Estimated VAT expenses over the next 12 months
  • Sales value over the last 12 months
  • Expenses over the last 12 months

Review your challenges and understand them to know whether you’re VAT ready or not. Here, you need to have a well-designed and well-structured ERP that connects to all of your system including direct or indirect tax area with an easy access. To have more information Read.