What is zero tax | Zero Tax – Our Business


What is zero tax | Zero Tax – Our Business

What is zero tax | zero tax, Many people find similarities between exempt tax and zero tax and cannot differentiate between them. Therefore, through our article for today on our trading platform, we will show what is zero tax | Zero tax and its relationship to exempt tax.

Where the value-added tax is one of the types of indirect taxes that are implemented on many goods and services. Many countries have used it, as the number of countries working in this type of tax has reached more than 160 countries distributed around the world. Among these countries was the Kingdom of Saudi Arabia, which announced its adoption of this tax, with a value of up to 5%. If you want to know more about what is zero tax | Zero Tax Follow our next lines.

What is zero tax

Zero tax is the tax imposed on a specific group of goods and services through legal texts found within the tax law. Which the Ministry of Finance worked on imposing, as it is possible to work on lifting it when desired, and without referring to amending laws. This is as a result of the fact that the real value of the tax is actually zero, so it is possible to recover the value of the tax based on the inputs.

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What is tax exempt?

An exempt tax is each of the goods and services that have been exempted from tax by a legal provision within the tax code. It differs from the zero tax in that the tax on its inputs can only be recovered by means of a legal text or by amending the legal text. As for exempt sales, it is the sum of sales that have been exempted from taxes, for example, oil, sugar, coffee, and others.

What is tax exempt?

What is tax exempt?

The difference between zero tax and exempt tax

As we mentioned earlier, the zero tax differs from the exempt tax in that the former does not need to be amended by any of the legal texts. While the second, it needs to be amended by a legal text. Thus, the first is amended at any time without making an amendment to any of the texts, in contrast to the exempted tax.

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Goods subject to zero tax

The Ministry of Finance has indicated the goods and services subject to the zero tax, as follows:

  • Investment residential buildings
  • charitable buildings
  • Export and import of precious metals
  • Export of land, air and sea transport
  • Export of both natural gas and crude oil
  • Import and export of all services related to education
  • Export and import of everything related to health care services
Goods subject to zero tax

Goods subject to zero tax

Tax on investment residential buildings

It includes all the residential buildings that were purchased with the intention of investing, in other words, it is not intended to be the residential buildings that were purchased with the intention of housing. Where it is considered one of its most important conditions, the period of purchase, lease or sale should not exceed three years upon completion of its construction. It also includes non-residential buildings that are subsequently converted into residential buildings for sale or rent.

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charitable buildings

Charitable buildings are buildings that are designed with the aim of achieving charitable purposes. It must also be subject to the decisions of the Ministry of Finance in order for the zero tax to be imposed on it. But in the beginning, these buildings must be supplied by either selling or renting them.

Export and import of precious metals

What is meant by precious metals is gold, silver, platinum and other metals. Which are being invested, whether through exporting them to other countries or by importing them from abroad. Where investors call it “gold investing.”

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Export of land, air and sea transport

The export of land, sea and air transport is as follows:

  • Transportation of both goods and passengers
  • Exporting everything related to transportation
  • It also includes everything related to transportation services, including operating and maintenance materials, and others
  • Also working on importing various ships, aircraft, sea and air aids
  • Also export and import everything related to it

Export of both natural gas and crude oil

What is meant by the export of both natural gas and crude oil is the export of any of the natural gas or crude oil to any of the countries that implement the value-added tax system. Whether this use is by directly or indirectly applied.

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Import and export of all services related to education

As for the import and export of services related to educational operations and matters, the most important examples are the following:

  • Nurseries and all the educational stages you need.
  • Also, educational institutions of higher education are also subject to zero tax within the tax law.
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Export and import of everything related to health care services

It also means health care services subject to import or export are the services specified by the Ministry of Finance, the aim of which is to achieve:

  • Either health care
  • or preventative care

Which includes tools or goods that are directly subject to value-added taxes.

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Zero tax in Saudi Arabia

When the executive regulations for tax in the Kingdom were issued, the tax-exempt sectors were separated from the sectors subject to zero tax. As the most important services that are subject to VAT in the Kingdom are the following:

  • Merchandise exports to and from the Gulf countries
  • Goods exported and transferred to and from the Kingdom, as well as goods that have been temporarily imported
  • Also services supplied to residents within the Gulf countries
  • Also transporting goods and passengers
  • international transport
  • Transportation maintenance
  • import spare parts
  • Also, import consumables
  • Medicines, medical equipment and everything that is registered in the official list of the Ministry of Health in the Kingdom of Saudi Arabia
  • Gold, silver and other investment metals are subject to zero tax in two cases:
  • First: That this process is the first for the facility that works on production
  • And the second: The specified percentage of metal purity shall not be less than 99%.

In conclusion, through our article for today, we will explain everything related to What is the zero tax | Zero tax The difference between it and the tax exempt. We also talked about the goods subject to this tax and showed how. Besides what are the goods and how does the Kingdom of Saudi Arabia apply VAT.

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