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    VAT - Brief Overview

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    lightstar10
    Value Added Tax (VAT) is a type of indirect tax applied to goods and services. The document provides an overview of VAT and several key points for consideration regarding how VAT will be applied to SBM's products, services, invoices, and financial reporting beginning in 2018. Specifically, it notes that VAT will be charged at 5% but excluded from selling prices, and input VAT paid to vendors can be recovered from collections of output VAT from customers.

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    VAT - Brief Overview

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    lightstar10
    56 views13 pages
    Value Added Tax (VAT) is a type of indirect tax applied to goods and services. The document provides an overview of VAT and several key points for consideration regarding how VAT will be applied to SBM's products, services, invoices, and financial reporting beginning in 2018. Specifically, it notes that VAT will be charged at 5% but excluded from selling prices, and input VAT paid to vendors can be recovered from collections of output VAT from customers.

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    VAT - Brief Overview

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    Value Added Tax (VAT) is a type of indirect tax applied to goods and services. The document provides an overview of VAT and several key points for consideration regarding how VAT will be applied to SBM's products, services, invoices, and financial reporting beginning in 2018. Specifically, it notes that VAT will be charged at 5% but excluded from selling prices, and input VAT paid to vendors can be recovered from collections of output VAT from customers.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    56 views13 pages

    VAT - Brief Overview

    Uploaded by

    lightstar10
    Value Added Tax (VAT) is a type of indirect tax applied to goods and services. The document provides an overview of VAT and several key points for consideration regarding how VAT will be applied to SBM's products, services, invoices, and financial reporting beginning in 2018. Specifically, it notes that VAT will be charged at 5% but excluded from selling prices, and input VAT paid to vendors can be recovered from collections of output VAT from customers.

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    Value Added Tax

    An Overview

    Date |
    What is VAT?

    Value Added Tax, popularly know


    as ‘VAT’, is a special type of
    indirect tax in which a sum of
    money is levied at a particular
    stage in the sale of a product or
    service.

    | Confidential | Date | Other Information, if necessary


    Points for Consideration

    • VAT is not a Revenue


    • VAT is not a Cost
    • All SBM Products and Services are subject to VAT
    @5%
    • All SBM Customers are subject to VAT
    • SBM Selling price will remain without VAT value.
    • Selling price will appear in all SAP Documents
    including Master contract, PNL, Quotation, SBO,
    Sales Order and relevant reports. (without VAT)

    | Confidential | Date | Other Information, if necessary


    Points for Consideration

    • SBM Selling price calculation will not be effected by


    Input VAT.
    For Instance:

    Description Price VAT (%) Vat Amount


    Vendor Quote 2,000 5 100
    Manpower Charges 3,400
    Total Cost 5,400
    SBM GP 10% 600
    SBM Selling Price 6,000

    | Confidential | Date | Other Information, if necessary


    Points for Consideration

    • SBM Proposal will clearly specifies the Selling price


    and applicable VAT (This can be text only or as
    calculated value to be decided by BMCU).

    • All invoices issued to customer from 01.01.2018 will


    have system calculated VAT as shown below@5%.

    | Confidential | Date | Other Information, if necessary


    Points for Consideration

    | Confidential | Date | Other Information, if necessary


    Points for Consideration

    • All local vendors (registered with GAZT) will invoice


    SBM with 5% VAT
    • SBM Finance will record VAT from vendors at the time
    of Vendor Invoice Posting.
    • VAT claims from Customer is termed as "Output VAT" -
    Payable to GAZT
    • VAT payable to vendor is termed as "Input VAT" -
    Recoverable from GAZT
    • SBM has a responsibility towards GAZT to collect
    applicable VAT.
    • SBM has to report on monthly basis the value of
    Output VAT and Input VAT

    | Confidential | Date | Other Information, if necessary


    Points for Consideration

    • The difference between Output VAT and Input VAT


    is claimable or payable to GAZT
    • All Foreign purchases H/W which routed from
    Customs 5% VAT is applicable and will be paid to
    CUSTOMS
    • All Foreign purchases S/W and Services VAT will be
    calculated posted by SBM Finance as "Reverse
    Charge Mechanism".
    • This is SBM responsibility to deal with vendors
    which are VAT registered.
    | Confidential | Date | Other Information, if necessary
    Points for Consideration

    • As per transition clause VAT will not be applicable


    during 2018 for contracts which complies the
    following points.
    • a) Contract Effective Date is before 30.05.2017
    • b) Customer is entitled to deduct Input Tax in
    respect of the Supply of Goods or services in full
    or is an eligible person entitled to a refund of
    the Tax
    • c) Customer provides a certificate that "He is able
    to get the full value of VAT charged out or
    refunded"

    | Confidential | Date | Other Information, if necessary


    Points for Consideration

    • BMCU and Business Operations will jointly make


    sure to get the above points cleared before
    submitting any invoice to customer in 2018
    • SBM should not be charged VAT during 2018 from
    vendors where the PO/Contract effective date is
    before 30.05.2017
    • This is the responsibility of LOBs, Procurement and
    Finance to check above points while receiving
    Vendor invoices.

    | Confidential | Date | Other Information, if necessary


    Points for Consideration

    In case of Goods import from GCC :-

    • Vendor will not add VAT


    • For Goods VAT will be paid at Saudi Customs
    • For SW and Services VAT transaction will be
    recorded by Finance as "Reverse Charge"
    mechanism with no overall impact

    | Confidential | Date | Other Information, if necessary


    Points for Consideration

    In case of Goods import from Other Countries:-

    • Vendor will not add VAT


    • For Goods VAT will be paid at Saudi Customs
    • For SW and Services VAT transaction will be
    recorded by Finance as "Reverse Charge"
    mechanism with no overall impact

    | Confidential | Date | Other Information, if necessary


    Points for Consideration

    Thank You.

    | Confidential | Date | Other Information, if necessary

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