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Persons carrying on an economic activity residing outside the GCC countries may apply for registration as qualified persons for the purposes of recovering the tax (Value Added Tax) that they charged on goods or services supplied to them by a taxable person in the Kingdom of Saudi Arabia in accordance with the procedures described in Article (70) of the executive regulations for the value-added tax. The refund of the tax, whether the application is accepted or not, is subject to controls and study by the Zakat, Tax and Customs Authority.
Stages of tax refund procedures:
Phase I: The person has applied for registration as a person eligible for a tax refund
According to Paragraph (1) of Article 72 of the Executive Regulation on VAT, “ People who carry out an economic activity outside the GCC countries may apply to be considered eligible persons to claim a refund of the value added tax they charged on goods or services supplied to them by a person in the Kingdom.” A person is qualified according to this paragraph in the following cases:
1 If a person is a founder in a country that applies a transaction tax system similar to VAT and the person is registered in that tax.
2 If a person is a founder in a country that applies a transaction tax system similar to VAT and a similar mechanism is allowed in that country to refund the tax to residents of the Kingdom of Saudi Arabia who are charged with tax in that country - reciprocity treatment –
Thus, a person seeking restitution is required to be the founder of his economic activity outside the Kingdom or any other Member States, and violating the fulfillment of that condition - that the person is established in a country - one of the following two cases is achieved:
1 A person has a headquarters in the Kingdom or any Member State, and the place of business is referred to as the place of legal establishment of the business or the place of the actual management center in which the main decisions related to the conduct of business are taken when it differs from the place of incorporation.
2 A person owns a fixed establishment in the Kingdom or any Member State, and the fixed establishment is referred to as any fixed place of business other than the place of work in which the business is practiced and is characterized by the permanent presence of human and technical resources in a way that enables a person to supply or receive goods or services.
And when this condition is met, which is that the person is incorporated in a country outside the GCC countries - the country to which the refund applicant belongs is considered and whether it applies value-added tax or not, noting that the value-added tax is one of the taxes applied in more than 160 countries around the world, with different names in some countries, as it may be called in some countries (sales tax).
As for the second condition (achieving the principle of reciprocity), it is that the state allows the refund of the value-added tax in the case of a resident in the Kingdom who incurs the tax in that country.
Upon verification, the person is urged to request registration through the Authority’s electronic portal and to follow the registration instructions.
Phase II: Submission of refund requests
The Authority issued the controls and procedures for non-resident taxable persons in the GCC countries as persons eligible to refund the value-added tax issued according to the decision of the Zakat, Tax and Customs Authority Council No. (13-4-22) dated June 19, 2022, which included the controls to organize the refund mechanism for qualified persons.
Conditions for requesting a refund:
An eligible non-resident taxable person, when submitting an application, must meet the following conditions:
-The tax paid by the non-resident taxable person shall not be the result of supplies of goods or services in a Member State.
-The tax paid by the non-resident taxable person is for the purposes of his economic activity.
-The total amount of tax applied for shall be SAR 1000 or more.
-Submit the application through the Authority’s portal with proof of documents.
The periods for which requests for refund of tax paid by the qualified person may be submitted
1- A refund request may be submitted on the basis of a calendar year only, and it is not permissible to submit more than one refund request for the same period.
2- In other cases, the qualified person may submit the application and consider it in accordance with the procedures set forth in Article 70 of the Regulations.
Deadline for filing refund requests for any tax period
All refund requests must be submitted within no more than 6 months of the end of the relevant refund period.
Reference/ Citation
https://zatca.gov.sa/en/Pages/default.aspx
