Regulatory Alerts2020-10-14
VAT for Insurance Contracts Related to Financial Lease Contracts
The Saudi Arabian Monetary Authority mandates that lessors must absorb the value-added tax increase from 5% to 15% for cooperative insurance contracts tied to financial lease agreements, explicitly prohibiting the pass-through of this cost to lessees. This requirement stems from Paragraph 3 of Article 9 of the Financial Leasing System, which assigns cooperative insurance obligations to lessors. Finance companies operating in the Kingdom must comply with these instructions effective from their July 23, 2020 email dispatch.
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