Riyadh — The Zakat, Tax, and Customs Authorities have clarified on Monday that the used vehicle sale is subject to value-added tax (VAT); only when sold by a showroom or a registered person in the VAT system.
The authority stated that selling a vehicle by an individual who is not registered in the VAT system; and does not practice an economic activity to another individual is not subject to VAT.
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The authority clarified that all those registered in the value-added tax system; are obligated to collect the tax and make payment to the authority. In contrast, persons not registered in the system are not required to collect and make payment of the tax to the authority.
It is noteworthy that everyone who engages in any economic activity must register in the value-added tax system; if the annual revenues reach the mandatory limit of SR375,000.
Persons with an annual income exceeding SR187,500 but below SR375,000 are required to register voluntarily; while persons with annual revenues less than SR187,500 are not obligated for VAT registration.
