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KSA special date of supply rules amended

On 3 October 2021, the Board of Directors of the Zakat, Tax and Customs Authority (“ZATCA”) issued decision no. 21-02-06 approving several amendments to Article 20 of the KSA VAT Implementing Regulations (“Date of Supply in specific circumstances”).

A high level summary of the material changes:

  • The title of Article 20 is changed to “date of supply and tax due date in specific circumstances”

  • The date of supply for services made on a continuous basis where contract stipulates specific payment terms will be the earliest of the payment due date, actual payment, or date of issuance of invoice.

  • In case of periodical installments, the wording of “12 months period” has been added to the initial provisions so the date of supply rule will require a taxpayer to account for VAT at least once every 12 consecutive months.

  • New provisions have been added on the date of supply for governmental agencies.

Taxpayers making supplies to government agencies, according to contracts concluded in line with the government competitions and procurement processes, will be required to account for VAT at the earliest of (i) the date of issuance of payment order or (ii) the date of receipt of payment, to the extent of the amount received. The new provisions will not apply to supplies between a subcontractor and a principal contractor as part of a governmental contract.

These amendments will take effect as of 1 November 2021. For the services to governmental agencies as part of procurement contracts, the date of supply will be the earliest of the issuance of payment order or the date of receipt of payment (or part thereof and to the extent paid).

Taxpayers supplying services made on a continuous basis and/or making supplies to governmental agencies should assess whether the above amendments impact their business.

The following ZATCA guide provides additional clarification on the amendments (the guide is currently only available in Arabic, this blog will be updated when the English version is made available):

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