Increase in Value Added Tax on Cooperative Insurance Contracts Related to Leasing Contracts
| No: 42011687 | Date(g): 14/10/2020 | Date(h): 27/2/1442 | Status: In-Force |
Translated Document
Referring to SAMA instructions informed via email on 03/12/1441H corresponding to 23/07/2020G, regarding the increase in value-added tax for cooperative insurance contracts related to leasing contracts.
The instructions, which must be adhered to from the date they were sent by email, are as follows:
Referring to the decision to raise the value-added tax from 5% to 15% starting from July 1, 2020G, and in response to inquiries from some lessors regarding how to handle this increase in cooperative insurance contracts related to Finance lease contract.
SAMA would like to confirm that the lessor shall bear the increase resulting from the raised value-added tax for cooperative insurance contracts related to leasing contracts, and it is not permissible to pass this increase on to the lessee. This is based on paragraph (3) of Article Nine of the Finance Lease Law, which states: "The lessor shall be responsible to obtain cooperative insurance on the leased asset and shall not require it from the lessee."