Referring to the Central Bank instructions communicated via email on 3/12/1441 H (23/07/2020) 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, 2020, and in response to inquiries from some lessors regarding how to handle this increase in cooperative insurance contracts related to leasing contracts.

The Central Bank would like to confirm that the lessor must absorb 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 Leasing Law, which states: "The lessor bears the cooperative insurance on the leased asset, and it is not permissible to impose it on the lessee."