VAT complexities at bay

What kind of technological investments do you see in the Kingdom?

I believe that the future invesments in Saudi Arabia will be on those sectors:

• IOT
• 3D printing
• e-Transformation and digitazation, especially at government sector
• R&D on (automation)

What does Vision 2030 mean for the ICT sector?

Vision 2030 relay on ICT as the main player to achieve it goals. If we look at the National Transformation Program (NTP 2020) which is the first program at Vision 2030 we found that the NTP is pure ICT dependent program. IT is the main asset and enabler at vision 2030 from my point of view.

Tell us about any recent projects in MOFA

As part of Vision 2030 aimed at achieving budgetary balance, KSA launched VAT on 1st January 2018. The VAT program is a fundamental pillar for the economic sustainability of the Kingdom of Saudi Arabia.

The objectives of the project align closely with the aspirations stated in the National Transformation Program including “Achieving budgetary balance”, “strengthening financial governance”, “increasing non-oil revenues” and “improving spending on programs and projects.”

The program of work is complex and ambitious, requiring multiple topics to be covered in parallel (law and regulation, processes and systems, communications, and training, etc.) and delivery of a significant amount of work beyond MOFA direct control.

Diplomatic, Consular Missions, Organizations, International Regional Organizations, and offices accredited to Kingdom of Saudi Arabia are entitled to benefit from tax concessions in certain cases under the Value Added Tax Law (through VAT refund).

The request of refund of tax shall be consistent with the provisions of any international treaty or convention of a different kind related to tax obligations to missions, diplomatic bodies, and international organizations accredited to KSA and exercising its activities in accordance with the provisions of relevant international convention.

Applications for tax refund may be made in respect of the activities of the diplomatic missions, consular offices, international and regional organizations and their offices, as well as for the costs incurred by the diplomatic agents of that mission who are directly appointed to them and carrying the diplomatic card issued by Ministry of Foreign Affairs (MOFA).

What is the ease that you have woven into the systems?

When Eligible Persons (EPs) log in with their credentials for registration. Mission information is then retrieved by MOFA database such as mission name and its ID number. They are set to be filled at the backend to assure its accurate and easiness for applicants.

EP should initiate filing the application form by filling the variable fields listed in registration form for the diplomatic mission and its representative information. Representative shall claim for all refund requests regarding the diplomatic mission or diplomatic members.

There will be automatic validation to ensure all mandatory fields are completed before proceeding. MOFA then shall review and validate the submitted forms.

Submitted forms could be rejected or have comments by MOFA. If approved by MOFA, the submitted form will be then sent to General Authority of Zakat and Tax (GAZT).

GAZT will review the form approve, reject, or request for additional information. Application status will change according to the action taken. All notifications will be pushed to the EP, MOFA, and GAZT through VAT system.

Furthermore, EP will receive notifications via SMS and Emails for better service. Registration Application form validated and pushed contain 3 mode:

1. New application form is for diplomatic missions wishing to register for VAT refund.
2. An application modification is for existing registered diplomatic mission that wish to change their status.
3. Additional information is for current diplomatic mission that have applied but have been requested to provide more information.

What is the Business Process for VAT Refund?

The EP can request for refund when receiving VAT account number assigned to the Diplomatic Entity after registration approval.  Applicant could request for refund based on its preferred refund period selected in registration form. Filing will be required annually or quarterly. Our expectation is that quarter submission of VAT returns could be applicable to large taxpayers and annually submission of VAT returns to small and medium taxpayers.

• File diplomatic mission purchases as well as diplomatic members.
• MOFA then starts processing received applications. Capture and validate the
• refund form and push to GAZT only approved applications through the integrated
• interface.
• GAZT IT systems check that all received fields matches the business rules. Send
• MOFA and Diplomatic missions all relevant notifications (automated process). As
• well as through SMS and emails.
• GAZT will also send VAT total amount directly to Diplomatic Mission IBAN
• account.