Introduction

Today, Sunday, Zakat, the Saudi Arabian Tax and Customs Authority began to provide the possibility of calculating value added tax on profits from the sale of “eligible used cars”, in which it is intended for persons who have a license to engage in the activity of car trading. such as automobile agencies and car dealerships registered with the authorities for tax purposes, subject to specific conditions.

Profit Margin Method

The authorities stated that the use of the profit margin method is not mandatory as tax may apply to the entire amount due under the currently applied method, noting that one of the most important conditions that must be met in order to use the profit margin method is that that the car is classified as a “suitable used car” by the authorities.

Conditions

The vehicle must also exist and have previously been used in the Kingdom and the seller must be registered with the Authority for VAT purposes and licensed to engage in motor vehicle trading activities, in addition to the need for the licensed dealer to obtain approval. used cars qualified, according to the Saudi Press Agency, “SPA.”