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Saudi Releases VAT Guide On Insurance

by Lorys Charalambous, Tax-News.com, Cyprus

30 November 2017


Ahead of the implementation of value-added tax from January 1, 2018, Saudi Arabia has released guidance on rules relevant for the insurance sector.

Saudi Arabia's General Authority on Zakat and Tax said, under the regulations, all insurance products and contracts in Saudi Arabia are taxable at the standard rate of five percent, with the exception of life insurance contracts, which are exempt from VAT.

Non-exempt activities include insurance contracts and products classified by the Saudi Arabian Monetary Authority (SAMA) as general insurance or health insurance, as well as reinsurance products and contracts, insurance brokerage services, or any other services related to the insurance sector. All products categorized by SAMA as life insurance will be exempted, the Authority said, adding that consumers and individuals will be required to pay VAT on any commission or additional fees due to the insurance brokers, regardless of whether the fees are related to services related to public, health, or life insurance.

Payments made by insurance companies to insured persons will not be subject to VAT.

The authority has urged all businesses with annual revenues exceeding SAR1m to register for VAT before December 20, 2017, to avoid fines and the suspension of government services.

TAGS: individuals | tax | business | value added tax (VAT) | Saudi Arabia | insurance | fees | regulation | services | Tax

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