Starting January 1, 2018, money transfer charges will increase as 5% Value Added Tax (VAT) will be levied on money transfer fees, according to the General Authority of Zakat and Tax (GAZT), the government branch responsible for managing the implementation, administration and enforcement of VAT in Saudi Arabia.
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The 5% VAT will be on the money transfer fee and not on the principal amount of the money to be transferred, GAZT clarified, adding that the person who is sending the money will pay the VAT.
However, many financial services will be exempt from VAT such as several transactions and services like interest on loans, lending fees charged with an implicit margin such as loans and credit cards, mortgages, financial leasing, transactions involving money and securities, as well as current, deposit and savings accounts.
Life insurance policies will also be exempted.
Registered businesses conducting economic activities are subject to VAT. However, businesses conducting VAT-exempted economic activities are not entitled to deduct VAT.
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The determining factor whether VAT should be levied on these or not will be the nature of economic activities.
House rent and medicines are exempted from Value Added Tax (VAT) as well.
Passport and driving license issuance and renewal fees will be exempted to vat.
Exports to countries outside the Gulf Cooperation Council, services given to non-residents of GCC countries, international transport services for goods and passengers, import of spare parts of qualified means of international transport and their maintenance, repair and modifications will also not be subjected to VAT.
Source: Saudi Gazzete
House rent and medicines are exempted from Value Added Tax (VAT) as well.
Passport and driving license issuance and renewal fees will be exempted to vat.
Exports to countries outside the Gulf Cooperation Council, services given to non-residents of GCC countries, international transport services for goods and passengers, import of spare parts of qualified means of international transport and their maintenance, repair and modifications will also not be subjected to VAT.
Source: Saudi Gazzete
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