“Zakat”: Changing the character of the car does not make it the same as used in the “added” tax

The Zakat, Tax and Customs Authority stipulated that the basic character of the car should not be changed to classify it as a qualifying used car to which the profit margin tax on used cars applies.

And the Zakat Authority indicated, in a report issued recently, that there are 4 types of cars that are not eligible for taxation on them according to the profit margin, which are “cars that are not classified as used cars qualified by the authority, or cars imported into the Kingdom, even if they are used, and cars that were taxed on a regular basis.” Separate in the bill, as well as new cars ».

The authority classified cars eligible for taxation on their profit margin, that they were driven on the road for personal or work purposes, that they were used and registered in the Kingdom, and that they are suitable for reuse as they are in their condition or after making some improvements to them.

At the beginning of this July, the Zakat, Tax and Customs Authority made it possible to impose value-added tax on the profit margin of qualified used cars, after those qualified to obtain the approval of the authority, so that the tax becomes only on the profit margin and not on the entire amount of the sale of the car.

The Authority had previously clarified the method of profit margin targeting car agencies and showrooms registered with the Authority for the purposes of value-added tax, which engage in the activity of car trade; According to specific conditions, stressing that the method of calculating the value-added tax on the profit margin is not mandatory, as the tax can be applied to the entire amount due according to the previously applied method.

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