Summary
VAT stands for Value Added Tax, and is levied on the majority of goods and services in the GCC (Gulf Cooperation Council) countries, except certain essential commodities. It is being applied in the GCC countries to promote economic diversification and fiscal sustainability.
A business only needs to register for VAT if its annual revenue exceeds a particular threshold. This limit will vary depending on the GCC member state, but the general figure is SAR 375,000. When you register for VAT, the ZATCA will assign you a Tax Registration Number (TRN), which is a 15-digit unique identifier. You can configure your tax settings using this TRN number.
If your business is VAT registered, you need to have several responsibilities to stay compliant with ZATCA. You will need to:
Charge the standard rate of 15% to all taxable goods and services
Produce VAT compliant invoices to your customers which must include VAT amount, tax registration number (TRN), and other required details
Pay the VAT collected from your customer to the ZATCA before the due date
File VAT returns on a regular basis (monthly, quarterly, or annually) as agreed upon with the ZATCA, presenting the collected VAT on sales and the paid VAT on purchases
Keep accurate records of all your revenues and expenditures from your orders, invoices, and purchases for at least five years. These records contribute to accurate VAT return filing and may be required during an ZATCA audit
In order to fulfill these responsibilities and avoid ZATCA penalties, fines, and other enforcement measures, you must configure your tax settings in Zoho POS. You cannot apply tax rates to your transactions until you configure your tax settings.
Setup your Taxes
If your business is VAT compliant, you can add your VAT-related details in the Tax Settings.
Tax Rates
Once you enable the tax, the below tax rates will be shown.
Standard rate - 15%
This tax rate is applied in the vast majority of business transactions in Saudi Arabia.
Zero rate - 0%
Zero-rated supplies include:
Exports of goods and services outside the GCC
International and intra-GCC transportation
Supplies for certain sea, air, and land modes of transportation (such as aircraft and ships)
Provision of specific educational services, as well as other associated goods and services
Providing specific healthcare services, as well as related goods and services
Additionally, each member state can be zero rate or VAT-exempt: (the Educational sector, the Medical sector, the Real Estate sector, and the Local Transport sector)
Exempt
If any of the items are exempted from VAT, you can select them as exempted from VAT while creating transactions. You don’t need to create a new tax for such transactions.
Out of Scope
If the supply of any of your goods does not fall under the scope of VAT, then you can select this option while creating transactions for them in the Zoho POS web application.
Default Tax Rate
The Standard Rate (15%) will be marked as default tax since this rate will be applied to the majority of the items in accordance with ZATCA's VAT guidelines. If the item does not have a tax rate defined, the tax marked as default will be applied when creating transactions.
Add tax rates to Items
Based on the tax treatments, you can set your tax rates for your goods and services. Once you set item tax rates, it will get auto populated once you create invoices for them.
