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Jun 10, 2024

ZATCA introduces new option to calculate VAT on used cars

https://arab.news/cu99d RIYADH: Secondhand car business in Saudi Arabia can expect huge relief with the government introducing a new taxation method that reduces the value-added tax on the sale of

https://arab.news/cu99d

RIYADH: Secondhand car business in Saudi Arabia can expect huge relief with the government introducing a new taxation method that reduces the value-added tax on the sale of used vehicles.

The Kingdom’s Zakat, Tax and Customs Authority on Sunday introduced a new option to calculate VAT on the profit margin of qualified used cars instead of the sale price, the Saudi Press Agency reported.

This initiative specifically caters to individuals involved in the car trading business, including authorized agencies and registered car showrooms under the authority’s VAT regulations, subject to specific criteria.

The authority emphasized certain conditions for employing the profit margin method such as the car being classified as a “qualified used car” by the administration and previously used within the country.

Additionally, the seller must be registered with the authority for VAT purposes and possess a license for car trading activities.

Approval from the authority is also required for eligible traders to utilize the profit margin method for qualified used cars.

Furthermore, ZATCA highlighted that the profit margin method is not mandatory, and the tax can still be applied to the full amount based on the current approach.

To address any inquiries regarding the calculation method of the profit margin for qualified used cars, individuals can reach out to the authority’s unified contact center number, which operates 24/7.

Moreover, ZATCA announced in April that taxpayers subject to VAT exceeding SR150 million ($39.9 million) during the year 2021 or 2022 are required to integrate their e-invoicing systems with the Fatoora platform.

This development comes as the authority announced the revenue figure as the criteria for selecting establishments in the fourth wave of the phase two of e-invoicing, scheduled to commence on Nov. 1, 2023.

The authority noted that the second phase calls for additional requirements also called the generation phase and will be done gradually and in groups.

Some of the key requirements in the second stage include linking the electronic billing system of taxpayers with the Fatoora platform and issuing electronic invoices based on a specific formula.