BMS Auditing does a thorough VAT Health Check in KSA to comply with all tax regulations, avoid VAT fines and penalties in Saudi Arabia and imply other VAT services. Before introducing VAT into your business, you must be aware of the impacts it makes and how VAT health check helps you in evading all the negative impacts. So, let's get into the article

VAT was implemented in Saudi Arabia in July 2020 on most goods and services at a rate of 15%, previously 5%. VAT is imposed on goods and services that are bought, sold, or imported to Saudi Arabia unless it is stated or exempted. The most common taxable goods and services are Food & Beverages, Educational services, Healthcare services, Local transportation, and all types of insurance except life insurance.

It is necessary and mandatory to comply with VAT regulations to avoid VAT fines and penalties imposed by the KSA Law and Zakat. 


Impact of VAT Health Check in KSA

Since the implementation of VAT in 2018, most organizations had experienced a great change in the way of doing business, as certain family businesses had brought structural changes in the business types and corporate setup to make them compliant with VAT. 

Due to the shortage of time and the cost involved, businesses implemented VAT without necessary changes in the way of conducting business, which included changing the existing structure, such as IT systems, Supply Chain, etc. 

When VAT is imposed in a country, every firm is obliged to do an impact assessment / VAT Health Check to find the common impacts of VAT on a Business. Based on the impact assessment, they will be able to determine which sectors of business VAT will have an influence and what they will need to do to fully implement it. 

For example, They will be able to adopt the right tax position for their suppliers based on the impact assessment. Businesses will be able to determine their eligibility for VAT registration, the effect on their working capital and system, the necessary adjustments in procedures, compliance requirements, and so on.

The impact of VAT on businesses differs in every country. It is completely based on the VAT regulations and laws carried on by the country's tax department. So, the procedure for VAT Health Check varies by country-wise. 


Need For VAT Health Check in Saudi Arabia

A VAT Health check is a type of audit to find the risks and errors in the VAT by reviewing and assessing the VAT returns and refunds filed earlier. The VAT health check helps the business to detect errors and thus make necessary corrections before getting fined or imposing penalties. 

VAT Health Check in KSA enables you to protect your business from unexpected non-compliant sections of the ledger management process. 

A VAT health check helps to evaluate the strength and the technical accuracy of the VAT management and processes aligned during implementation. Proper guidance and recommended changes or extra measures in your business help to minimize the risks of non-compliance, including

  • Identification and assessment of the VAT risk levels across the business 
  • Interview the key personnel to evaluate the VAT knowledge and understanding
  • Walk through the tests or controls for business transactions and operations
  • Documentation of the findings, possible gaps or limitations with suggestions to address the defects


VAT Health Check saves you from Penalties

When a company conducts VAT health check in Saudi Arabia, they identify several issues where the businesses take positions that are legally not right, thus leading to the imposition of penalties. Over the past few years, companies have managed well to avoid initial challenges, however, they have been hesitating to re-consider the operations and explore avenues to optimize the costs, possible tax savings, or a need to upgrade to a completely compliant with the VAT law. 

It is hence concluded that health checks and regular audits should be encouraged in every organization to avoid last-minute complications. Since VAT is an indirect tax put on the end consumers, there should not be a direct financial impact on the businesses except the non-recoverability of VAT on certain blocked expenses and incurring the costs of non-compliance. 


How BMS helps you with VAT Health Check?

BMS offers full-fledged VAT Health check services in KSA comprising a review of the VAT processes within the business. The main objective is to provide you with the relevant recommendations to align the VAT affairs of your business, thus minimizing the possible complications with the VAT department in the future. 

BMS Auditing Saudi Arabia has great expertise in VAT-related issues and hence can provide you with quality services in VAT.  Our team has professionals to assist you with VAT health checks and regular audits, thus protecting you from VAT penalties. 

Need assistance in VAT Health Check in Saudi Arabia? BMS is here to serve you the right way! 

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