The Value-added tax has been all set implemented in Saudi Arabia, UAE and other GCC countries from January 1, 2018. Businesses are wondering which items/services have been taxed under VAT and which are exempt. Meanwhile, the recent news about VAT on fuel products has created a stir in the market. Let’s find out more about VAT on fuel and its impacts.
VAT on Petroleum Products
If you are wondering whether petroleum products such as petrol, gasoline, etc would be under VAT coverage or not, they have The VAT is applicable to petrol at the standard rate of 5 percent. This changes many things, including the cost of transport.
It has been confirmed that the VAT at the rate of 5% will also be applicable to the local transportation services, including the transport of goods and passengers within the country. The transport service providers will collect taxes from their passengers, adding to the ticket cost.
The international transport (of goods and passengers), however, will be treated as zero-rated supply under VAT. Saudi Arabia is following the standard VAT agreement decided by all the GCC countries. Transport related services like the maintenance and repair of selected international airports, port charges, customs duties, transport-related fees, aircraft crews, reservation fees, storage charges, excess baggage fees, parking fees, customs clearance fees and air navigation services fees will all be zero-rated services.
VAT has been implemented at a single rate of 5% on selected services and products, however, some specific supplies have been exempt from VAT while some others will be treated as zero-rated. Petrol and related products have been considered taxable supplies for VAT.
VAT on other related things
- Withdrawal and deposition of cash – No VAT
- Car deals (sales/purchase) between individuals – No tax
- Selling cars to garages – No VAT
- Sale/rental of residential properties to relatives (first-degree) – No tax
Cash transfers between banks, mortgages, credit cards, life insurance, stocks, financial leasing, interests and investments, personal finance, etc. – No VAT