What happens on January 1, 2019?
The first year with GCC VAT is coming to close by this December and Saudi Arabia had been first to implement the VAT successfully and comprehensively and even more professionally than UAE.
Saudi had a more planned approach and they had given the very small traders who makes only below 1 Million Saudi Riyals as turnover (sales) annually to be exempt from VAT for one more year, that is till December 31, 2018.
The date nearing closer, what happens on 1 January, 2019 is, every business doing eligible business as defined under VAT law who has an annual turnover more than SAR 375,000 but below SAR 1 Million has to register for VAT and start VAT compliances.
What does it mean to small traders?
take support of reliable and professional consultants who can cater the needs of small entities at an affordable price
Small business units like baqalas, work shops, small traders, restaurants, tea and coffee shops etc who have an annual sales of more than SAR 375,000 (which literally means all) have to register for VAT and start VAT filing, keeping records and books as per VAT laws, get additional information from suppliers and customers to keep themselves complied with VAT laws.
Its advised to take support of reliable and professional consultants who can cater the needs of small entities at an affordable price to ensure no mistakes are made and compliance is not compromised and no huge penalty is attracted.
Small traders should start to think beyond their conventional mindset and take this new enactment as a challenge in business and rise above it by getting themselves ready with a good POS, Accounting Software and support from a reliable VAT Consultant. The additional cost incurred for such adaptations should be considered as an operational expense to avoid huge fines.
Non-Compliance = Huge Fines!
Small businesses should be very aware about the huge fines and penalties that can be imposed by the VAT Department for non compliances like –
- not keeping proper accounting and VAT records
- delay or non filing of VAT returns
- proper replies to additional information asked by department
- delay or non payment of VAT
- mistakes in VAT returns or any information provided to department
All these are only a limited list of non-compliances and there are many listed by the VAT department in their site and the fines start from a whopping SAR 10,000 onwards.
The below image shows the timeline to get registered. The image is a copyright of Saudi VAT Department and is shown here only with an intention of informative and educational purposes.