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Saudi Arabia Introduces Stringent Financial Record Keeping Requirements to Boost Transparency and Reduce Tax Evasion

The Kingdom of Saudi Arabia has taken significant strides towards becoming a major player in the global taxation and accounting scene, with recent updates to its tax and accounting regulations aimed at reducing tax evasion and increasing transparency.

Key Updates to Tax and Accounting Regulations

In an effort to bring Saudi Arabia in line with international standards, the government has introduced several key changes:

Mandatory E-Invoicing for Businesses

• All businesses with applicable income exceeding 500 million Saudi Riyals are required to use e-invoicing starting from January 1, 2023.
• The Zakat, Tax and Customs Authority (ZATCA) will implement a new platform called FATOORA to facilitate electronic invoicing.

Updated Real Estate Transaction Tax Implementing Regulations

• Exemptions have been introduced for certain transactions, including off-plan sales or rent activities developers.
• RETT will be implemented at the rate of 5% on real estate transferred from one entity to another via sale, trade-off, assignment, or donation.

Tax Amnesty Extension

• The tax amnesty deadline has been extended to allow companies to pay off overdue taxes without facing penalties.
• ZATCA exempting all associated fines and fees until further notice.

VAT Implementing Regulations Amendments

• Additional criteria have been introduced for qualifying organizations and activities for a 0% VAT rate.
• These changes bring Saudi Arabia’s tax and accounting system in line with global standards, providing a more robust framework for businesses operating in the region.

Government Commitment to Transparency and Accountability

“The recent updates to Saudi Arabia’s tax and accounting regulations demonstrate the government’s commitment to establishing a more transparent and accountable financial system,” said a spokesperson for ZATCA. “These changes will not only reduce tax evasion but also provide businesses with greater clarity on their taxation obligations, enabling them to operate efficiently and effectively.”

Saudi Arabia’s Rising Status in Global Taxation and Accounting Scene

With these updates in place, Saudi Arabia is poised to become a major player in the global taxation and accounting scene, offering businesses a secure and efficient environment in which to operate.