The Zakat, Tax and Customs Authority (ZATCA) will start implementing a new mechanism for Value-Added Tax entitlement for establishments contracting with government entities, beginning on November 1, 2021, after the Authority's board of directors has issued a recent decision approving the amendment of the provisions of Article (20) of the VAT Implementing Regulations, regarding determining the date of supply and tax due in specific cases.
This amendment to the regulation includes changing the date of supply and the VAT entitlement on all supplies of goods or services made from establishments contracting with government entities under the Government Tenders and Procurement law,
The Authority stated that the tax due date would be the date of issuing the payment order for the claim related to taxable supplies according to the procedures of the Tenders Law or the date of receiving the consideration for the supply or part of it, whichever is earlier, to ensure that the entity gets the tax due on the supply before declaring it and paying it to the Authority in its periodic returns.
The Authority has held several awareness workshops on this amendment since the first day of the issuance of the amendment decision, in cooperation with government entities, the business sector, and the Federation of Saudi Chambers, in order to clarify all the details related to the amendment and the desired goals of it, as the authority confirmed that this decision comes within the framework of its keenness to ensuring the compliance of these establishments with the provisions related to the value-added tax law, in addition to ensuring the continuity of the activity of taxpayers contracting with government entities.
ZATCA had recently published the Simplified Guideline for the tax treatment amendment of supplies made by establishments for a government entity in accordance with the government Tenders and Procurement Law, which includes the definition of the decision and the categories subject to it with a simplified explanation of the new mechanism, in addition to the tax declaration form for companies according to the recent amendment, as well as fines and scope of application.
The Authority called on all those wishing to obtain more information regarding this amendment to reach out via the unified number of the call center (19993), which operates 24 hours a day, seven days a week, or via e-mail at info@zatca.gov.sa or the "Ask Zakat, Tax and Customs" account on Twitter (@zatca_Care), or through Live Chat via the Authority's website (zatca.gov.sa).
