A proposed change regarding VAT recovery for licensed real estate developers has been presented by the Zakat, Tax, and Customs Authority (ZATCA). This amendment relates to products and services that developers buy in order to supply tax-exempt real estate. On January 10, 2024, the suggested modifications—which are only available in Arabic—were made public for public comment on the National Competitiveness Center's Public Consultation Platform.
The additional examples that ZATCA has proposed are intended to amend Articles 1 and 2 of Decision No. 04-08-22, dated 07/03/1444 AH (October 3, 2022). Regarding the VAT recovery for eligible real estate developers, this decision was made previously. The proposed modifications are summarized as follows:
Proposed Amendment Summary - Article 1:
Eligible real estate developers can retroactively claim VAT refunds on qualified real estate supplies from October 4, 2020. Refund requests must be submitted to ZATCA by the last period of the calendar year following the governor's decision. The governor may extend this period, considering conditions: the developer's registration as a taxable person with ZATCA during the claimed refund period, amendment of VAT returns by excluding invoices for the qualified person seeking a refund, submission of excluded invoices/VAT amounts as part of the refund request, and evidence of VAT payment on the invoices filed for refund.
Proposed Amendment Summary - Article 2:
Real estate developers with suspended properties, upon the authority's clearance, can reclaim VAT in KSA on goods or services tied to qualified real estate transactions. This pertains to refundable supplies, proportional to their connection to qualified real estate. An essential requirement is to incorporate the VAT in the refund application submitted during the suspension lift period, with an upper limit extending to the latest period of the calendar year in which the suspension is resolved.
Public Consultation and Tax Impact Readiness
The platform for public feedback gives interested parties a unique opportunity to voice their thoughts and suggest possible improvements for the proposed amendments. Any feedback must reach ZATCA via the assigned channel by February 8th, 2024, at the latest.
Furthermore, after these revised regulations take effect, taxpayers should assess how these changes will affect their tax situation and be prepared to take the necessary actions.
ZATCA's Proposed VAT Amendments: Retroactive Recovery and BMS Auditing Assistance
Proposed VAT amendments for real estate developers by ZATCA offer retrospective VAT recovery from October 4, 2020. Eligible developers can submit refund requests to ZATCA, with an extended period subject to the governor's decision. Conditions include developer registration, VAT return amendments, and evidence of paid VAT. Article 2 allows developers with suspended properties to claim VAT upon clearance, proportional to the linked real estate. Public feedback is open until February 8, 2024, providing stakeholders a voice in the amendment process. BMS Auditing stands ready to assist businesses in navigating these changes, ensuring strategic adaptation and continued success.
Q: What is the significance of ZATCA's proposed VAT amendments for real estate developers?
A: The amendments allow eligible developers to retrospectively claim VAT refunds on qualified real estate supplies from October 4, 2020.
Q: How can real estate developers initiate the VAT refund process under the proposed amendments?
A: Developers must submit refund requests to ZATCA by the last period of the calendar year following the governor's decision, meeting specific conditions.
Q: What conditions must real estate developers fulfill to qualify for VAT recovery under Article 2 of the proposed amendments?
A: Developers with suspended properties can claim VAT on goods or services tied to qualified real estate transactions upon clearance by the relevant authority.
Q: How does the public consultation platform play a role, and when is the deadline for feedback?
A: Interested parties can provide feedback on the proposed amendments until February 8, 2024, through the designated channel on the public consultation platform.
Q: How can BMS Auditing assist businesses in navigating the changes brought by these VAT amendments?
A: BMS Auditing is ready to provide strategic assistance, ensuring businesses adapt effectively to the revised regulations and achieve continued success.