Until recently, the Saudi General Authority of Zakat and Tax (GAZT) required non-resident taxpayers to choose a local fiscal representative for VAT filing purposes. The decision was rescinded a year after the introduction of the value added tax. However, such entities must appoint a local accountant to keep accounting records updated. Below, our company formation agents explain when and how foreign companies can use a fiscal representative in Saudi Arabia. They will also advise on the requirements non-resident companies need to comply with in terms of taxation.
| Quick Facts | |
|---|---|
| Requirement to appoint a fiscal representative in Saudi Arabia (YES/NO) | No, however, a local accountnat must be hired for compliance purposes. |
| Types of businesses that can appoint a fiscal agent | All types of companies can appoint fiscal representatives. |
| Possibility to appoint a fiscal agent by sole traders (YES/NO) |
Yes, such a service is also available for VAT paying sole traders. |
| Who can act as a fiscal agent in Saudi Arabia? |
– accountants, – accounting firms, – specialized agents |
| Registration requirement for a tax agent (YES/NO) | Yes, the appointed agent must be accredited. |
| Availability of VAT registration services through a fiscal agent (YES/NO) |
Yes, this is the main solution provided by such an agent. |
| VAT reporting services availability (YES/NO) | Yes |
| Availability of VAT filing services (YES/NO) | Yes, the representative can file VAT reports on behalf of clients. |
| Record-keeping services | Yes |
| VAT control support (YES/NO) | Yes, VAT control can be exercised through a tax agent. |
| VAT refund assistance (YES/NO) | Yes, if applicable |
| Import-export procedure representation availability (YES/NO) | Yes, this task can also enter in the attention of the agent. |
| Tax registration support (YES/NO) | Yes, at the request of the client |
| Why appoint a fiscal agent in Saudi Arabia? | A fiscal representative can ensure tax and VAT compliance, assist with updates on the legislation, and act as a liaison with the tax authorities. |
| Availability of fiscal representation services with our accountants (YES/NO) | Yes, our Saudi accountants provide such a service on demand. |
Table of Contents
Availability of fiscal representatives in Saudi Arabia
Non-resident companies are no longer required to appoint tax agents for complying with the VAT regulations. However, for compliance purposes, they need to use the services of a local accredited Saudi accountant. Considering that the fiscal representative must also be an accountant or an accounting firm, confusion may appear. The main difference between the two services is that the local accountant will be in charge of record-keeping tasks.
If you need fiscal representation services in Saudi Arabia, our accountants are at your disposal.
Requirements for companies not appointing a Saudi fiscal representative
Until a few years back, the GAZT had required that non-resident companies choose a local VAT agent for the purposes of filing, registration, and VAT payments. This decision was made to ease the communication between the two parties. However, now, foreign taxpayers who do not have Saudi fiscal representation will need to designate a local accountant going forward in order to maintain records.
In the absence of a fiscal representative, foreign taxpayers will additionally need to provide GAZT with a cash deposit or bank guarantee. The assessment will be based on the VAT liabilities for approximately 6 months. On the other hand, those choosing to operate through a fiscal representative in Saudi Arabia will not be subject to any deposit or guarantee.
If you want to register a company in Saudi Arabia and need advice, you can rely on our local consultants.
Services provided by a fiscal agent in Saudi Arabia
Fiscal representative services in Saudi Arabia are available for both resident and non-resident companies. They are usually provided in order to ease VAT and tax compliance in this country.
Here are the main services available with such an agent:
- support in obtaining a VAT number in Saudi Arabia without establishing a permanent presence, such as a branch office;
- ensure VAT compliance and tax declaration processing;
- assistance in adhering to other local tax regulations;
- acting as a liaison office with the Saudi tax authorities.
In most cases, the fiscal representative is employed for VAT compliance, however, local companies also use such services for other tax-related matters.
We remind you that our company registration advisors in Saudi Arabia also have accountants in their team, so we are ready to provide multiple services.
Who can act as a fiscal representative in Saudi Arabia?
Accountants and accounting firms registered with the Saudi Organization for Chartered and Professional Accountants (SOCPA) will be admitted as fiscal representatives without the need for additional qualifications. For other companies, the tax representative needs to:
- have a contract with a taxable person;
- have a Saudi residence permit or Iqama;
- be in business for at least 5 years.
VAT compliance requirements for local businesses in Saudi Arabia
Here are the main aspects to consider about the value added tax in Saudi Arabia:
- VAT registration is required for all Saudi companies selling goods or services for a minimum amount of SAR 375,000 in a calendar year;
- starting with January 1st 2023, companies must issue e-invoices;
- failing to file VAT returns within the due date will attract a fine of 5% of the unpaid amount of money.
VAT compliance for foreign companies in Saudi Arabia
There are two ways through which a foreign company can be present on the Saudi market:
- the first one is to establish a local presence by creating a subsidiary or branch office;
- the second one is selling goods and/ or services without a physical presence, which is the case of e-commerce and other types of online businesses.
No matter the choice, registration for VAT is mandatory if the company sells or provides VAT-taxable goods, respectively services. Also, it must do so when the taxable turnover is more than SAR 375,000 in a calendar year. Voluntary registration is also possible.
In the case of non-resident businesses, on the other hand, registration is mandatory within 30 days of commencing their activities. For e-commerce companies, registration is also required; however, the conditions differ from country to country.
Non-resident companies are also required to make a deposit or offer a bank guarantee to the Saudi GAZT to cover VAT liability. There is no specific amount, as it will be approximated by the tax authority to cover a 6-month period.
To ensure compliance with these regulations, it is recommended to appoint a fiscal representative. Our accountants in Saudi Arabia can offer such a representation.
Why is it recommended to work with a Saudi fiscal agent?
The Saudi tax authorities offer some key advantages for those seeking to appoint a fiscal representative, and among these are the following:
- the agent is considered a guarantee for complying with local tax regulations, especially for non-resident companies;
- the representative can also offer assistance on export procedures, especially to those applying the 0% VAT rate;
- the agent can also assist with GCC (Gulf Cooperation Council) regulations applied in cross-border transactions and refunds.
The latter refers to the fact that a Saudi fiscal representative will know the tax rules applied in other GCC countries to offer appropriate support when requested.
Are there any exceptions to appointing a fiscal agent in Saudi Arabia?
Non-resident businesses may choose not to appoint a fiscal representative; however, they are required to hire a local accountant or accounting firm in Saudi Arabia, which will be in charge of the bookkeeping.
It is essential to understand that the Saudi fiscal agent is in charge of VAT-related procedures, which is why there is a distinction between the services one can opt for. Our Saudi company formation agents can offer more information on the rules that non-resident businesses must comply with here.
We also have a team of lawyers who can assist in other matters, such as immigration to Saudi Arabia. Feel free to contact us if you need fiscal representation in Saudi Arabia.