Financial Crime World

SAUDI ARABIA: KNOW THE RULES FOR MAINTAINING FINANCIAL RECORD KEEPING REQUIREMENTS

In Saudi Arabia, every person registered under Value Added Tax (VAT) is required to maintain accurate and detailed records of their business transactions. The General Authority of Zakat and Tax (GAZT) has set out specific rules for maintaining VAT records, which are essential for businesses to comply with tax regulations.

Language of Records

  • All VAT records must be maintained in Arabic, the official language of Saudi Arabia.
  • Taxpayers can also include translations of these records in other languages as needed.
  • This includes issuing tax invoices in both Arabic and any additional languages required.

Location of Records

  • VAT records must be kept within Saudi Arabia, either physically or through secure access to a server where these records are stored.
  • Non-resident taxpayers must designate a tax representative who is responsible for maintaining their VAT records.
  • For electronic record-keeping, specific conditions must be met.

Retention Period for Records

  • Businesses must retain invoices, books, and accounting documents for a minimum of 6 years from the end of the relevant tax period.
    • Records related to May 2018 must be retained until December 2024.
    • Capital asset records, including tangible and intangible assets, must be kept for 6 years from the date of purchase.
    • Immovable assets, such as real estate, require a minimum retention period of 10 years.

Penalty for Non-Compliance

  • Failing to maintain VAT records can result in significant penalties.
  • A person who has not kept tax invoices, books, and accounting documents for the required period may face a penalty of SAR 50,000 or less per tax period.

To ensure compliance with Saudi Arabia’s financial record-keeping requirements, businesses should choose an effective software that can create and store Tax records as well as retrieve past records when needed. By following these rules, businesses can automate compliance tasks, resulting in greater efficiency and ease of compliance under VAT.