Bank Customers Awareness Regarding VAT

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In the Name of Allah, the Most Gracious, the Most Merciful Saudi Central Bank (SAMA) Headquarters

Banking Policy Department
Ref. No.: 391000029618
Date: 15/03/1439 AH
Attachments: 4

Circular

To the Esteemed,

Greetings,

Subject: Bank Customers Awareness Regarding VAT.

In continuation of the Institution's circular No. 391000029618 dated 15/01/1439 AH regarding supporting VAT awareness activities and programs, and in pursuit of the Institution's coordination with the Zakat, Tax and Customs Authority (ZATCA) to raise awareness among bank customers in the Kingdom about VAT, by publishing awareness messages through banks' websites and social media channels, and by sending SMS notifications to inform customers about services affected by the tax.

The Institution hopes for your cooperation in publishing the attached awareness messages through the bank's website and social media channels, and sending SMS notifications to alert customers about VAT-affected services as follows:

"Saudi banks will apply Value Added Tax (VAT) at a rate of 5% on bank service fees only (such as check issuance, account statements, and safe deposit box fees) effective January 1, 2018, with costs borne by the customer. There will be no VAT on loan amounts, their profit margins, bank account balances, and transfer amounts."

For an electronic copy of the attachments, please contact via email at aalfarhood@sama.gov.sa.

Yours sincerely,

Ahmed bin Abdullah Al-Sheikh
Acting Deputy Governor for Supervision

Distribution Scope: Banks operating in the Kingdom.

P.O. Box 2992, Riyadh 11169, Telegram: MARKAZI, Telex: 404400, Tel: 4633000, Fax: 4662414

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Digital banners with direct links to VAT website and news tickers for posting on banks’ websites

Digital banners

• [Banner 1: "The last date for VAT registration is December 20, 2017, for entities with annual revenues exceeding one million SAR" - "Register Now"]
• [Banner 2: "Ensure your entity is ready for VAT" - "Register Now"]
• [Banner 3: "Hurry and register your entity for VAT" - "Learn More"]
• [Banner 4: "Ensure your entity is ready for VAT through the official website VAT.GOV.SA"]
• [Banner 5: "VAT registration allows entities to clearly identify input tax (purchases) and output tax (sales), and claim tax refunds" - "Register Now"]

News ticker message
"VAT will be launched at 5% on 1st January 2018. Eligible businesses are required to be registered by 20th December 2017" "VAT will be applied at 5% on January 1, 2018. Eligible entities must register before December 20, 2017."

Banners to be clickable, directing to http://vat.gov.sa/

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Topic 1: What is VAT?

Post videos on YouTube channel

• Learn about VAT: https://www.youtube.com/watch?v=LiBKLv3S4z0

Post messages on social media channels

• #VAT is an indirect tax levied on goods and services rather than salaries.
• #VAT is calculated at all stages of the supply chain, from production or import to the final consumer.

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Topic 3: Financial services which are exempt from VAT

Post messages on social media channels

• VAT will not be collected on certain financial services: https://goo.gl/YWAoh3
• Bank administrative service fees are subject to VAT.
• Tax-exempt activities include interest on loans or lending fees charged with an implicit profit margin, including loans and credit cards, mortgages, and leasing finance, as well as transactions involving currency or financial instruments.
• Tax-exempt activities include current accounts, deposit and savings accounts, life insurance or reinsurance contracts.
• According to Article 29 of the Executive Regulations, exemptions do not apply to cases where consideration for a financial service has been explicitly paid as a fee, commission, or commercial discount.

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Topic 4: Businesses registration and readiness

Post messages on social media channels

• Learn about entity VAT registration deadlines based on their annual revenues.
• Entities can register for #VAT through the official ZATCA website: https://goo.gl/w9fyUi
• Entity registration for #VAT helps organize their financial transactions.
• Ensure your entity is ready to implement #VAT.
• Key points demonstrating your entity's readiness for VAT implementation: https://www.youtube.com/watch?v=NASPQJETRM8

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