VAT will also come into effect in the Kingdom of Bahrain with effect from 1 January 2019, with an obligation for some businesses to register in December 2018.

Small businesses whose obligation to register for VAT in the Kingdom of Saudi Arabia (KSA) was deferred under transitional provisions will have to submit an application for registration by 20 December 2018. In addition transitional arrangements which meant that VAT did not have to be paid in respect of existing contracts come to an end on 31 December, meaning that contract prices may need to be renegotiated.

VAT was introduced in the KSA with effect from 1 January 2018.

Appreciating the challenge facing businesses in the region, the minister of finance Mohammed Al-Jadaan, together with the board of the General Authority on Zakat & Tax (GAZT), approved the inclusion of transitional provisions in the VAT Implementing Regulations in September 2017. Two of these transitional provisions may now require action by businesses.

Under KSA VAT rules, any person whose annual value of taxable supplies exceeds or is expected to exceed the mandatory registration threshold of SAR375,000 ($100,000) is required to register for VAT with GAZT within 30 days.

However, if the annual value of their supplies does not exceed SAR1 million ($267,000) the transitional rules provided relief from registration in advance of 1 January 2018. The rules defer the effective date of registration for these businesses to 1 January 2019, but the application for registration has to be submitted by 20 December 2018.

“To allow sufficient time to gather the necessary information and documentation for the registration application, together with the time it may take for GAZT to process your application, it is important that businesses affected by this transitional provision, who have not already voluntarily registered, start the process as soon as possible,” Joanne Clarke said.