The Saudi Zakat, Tax and Customs Authority announced that it was possible to calculate the value-added tax (VAT) on the profit margin of the sale of certified used cars, without taking into account of the total sale value.
This regulation will be implemented conditionally, effective from July 1, 2023.
According to information obtained by Asharq Al-Awsat, the new steps came in response to the demands of the Federation of Saudi Chambers, in order to regulate and control the local market as well as reduce the prices of used vehicles.
The Federation of Saudi Chambers has held several meetings with the authority for the purpose of implementing Article 48 of the executive regulations of the value-added tax system, which defines the mechanisms for the supply of used goods.
Faisal Abu Shusheh, head of the National Committee for Car Dealers in the Federation of Saudi Chambers, told Asharq Al-Awsat that the decision would balance prices by calculating value-added tax on profit margins, and therefore the addition would be symbolic and contribute to lowering prices.
For his part, Muqrin Al-Mutairi, owner of a car showroom, said that the new measure would contribute to regulating the market and limiting manipulation in the sale of used cars. He also stressed that the decision would help reduce the prices of used vehicles in the local market.
The Saudi Ministry of Commerce has recently taken accelerated moves to protect the local car market from improper practices, after it witnessed a rise in prices and delays in delivering vehicles to customers.
The Ministry of Commerce requested car dealers to publish prices, policies, instructions and special procedures on their websites, and prevented rental companies from selling new vehicles.
