The 5% VAT will be on the money transfer fee
Money transfer charges will increase from Jan. 1 as 5% Value Added Tax (VAT) will be levied on money transfer fees,
according to the General Authority of Zakat and Tax (GAZT), which is
responsible for managing the implementation, administration and
enforcement of VAT in Saudi Arabia in close coordination with other
relevant entities.
The 5% VAT will be on the money transfer fee and not on the transfer amount, GAZT clarified, adding that VAT will be paid by the person sending money.
However, many financial services will be exempt from VAT. These include several transactions and services such as 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.
Other exempted services include life insurance policies.
Registered businesses conducting economic activities are subject to VAT, but registered businesses conducting VAT-exempted economic activities are not entitled to deduct VAT.
The 5% VAT will be on the money transfer fee and not on the transfer amount, GAZT clarified, adding that VAT will be paid by the person sending money.
However, many financial services will be exempt from VAT. These include several transactions and services such as 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.
Other exempted services include life insurance policies.
Registered businesses conducting economic activities are subject to VAT, but registered businesses conducting VAT-exempted economic activities are not entitled to deduct VAT.
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