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Saudi Arabia issues guidance on changes to tax stamps and zakat

Out-Law News | 15 Oct 2019 | 11:45 am | 1 min. read

Saudi Arabia’s tax authority has issued new guidelines covering two separate areas of the country’s tax system, following recent legislative changes.

The General Authority of Zakat and Tax (GAZT) released guidelines on the tax stamp system for selective goods subject to excise tax (22 page / 245KB PDF, in Arabic) in late September. Meanwhile in early October it issued a comparison guide on new and old regulations governing Zakat (110 page / 7.3MB PDF, in Arabic), which is a tax paid by Saudi individuals and companies under Islamic law.

The Saudi tax stamp system was launched in August 2019, initially for tobacco products, and is being expanded to other goods which are subject to excise tax. These include cigarettes and other tobacco as well as soft drinks and energy drinks. Sweetened drinks and e-cigarettes are also subject to excise tax following legislative changes introduced this year.

Under the tax stamp scheme, excisable goods will need to carry digital and paper stamps to confirm that all excise tax due has been paid.

The new guideline provides details on the specifics and types of tax stamps, how the stamps should be placed, and how to purchase or deactivate a tax stamp.

The comparison guide for Zakat provides details of changes introduced to the Zakat regulations earlier this year.

Middle East tax expert Joanne Clarke of Pinsent Masons, the law firm behind Out-Law, said businesses should use the guideline documents to help them navigate the changes.

“With deadlines set within the last few months of 2019 and throughout 2020 for the implementation of the new requirements in relation to the digital stamping of certain excise goods, together with the new Zakat rules, these guidelines will be important for businesses within the scope of these taxes in Saudi,” Clarke said.

Clarke said the changes to the Zakat rules included how the Zakat base is determined, which expenses are allowed for deduction from Zakat, and how businesses and individuals should account for Zakat on an estimated basis. The guidelines also covered registration, documentation, inspection, appeals, collection procedures and more, Clarke said.