Tax evasion in Saudi Arabia is low due to strong systems

Director General of Zakat and Income Tax Authority in Saudi Arabia, Tarek Al Sadhan said that tax evasion is low because of the strong systems, and the kingdom is preserving its tax revenues from foreign countries, adding that it is a global issue, because it is hard to put specific numbers for these companies’ gains.

He said that, some officials attended international discussions about tax evasion attempts, confirming that, Saudi Arabia will soon sign agreements with some other countries to protect its rights in revenues taxes. He added that, Zakat and Income Tax Authority is ready for the selective tax, but after it finishes all preparations concerning Value Added Tax (VAT), which will be applied by January 2018.
 
He confirmed that, the authority has no intention to force zakat on individuals, but it is its duty to collect it and taxes from businesses sector, adding that, the authority will have electronic connection with some government bodies. Council of Ministers and judge decided to make the authority an independent body, with independent funding. Al Sadhan said that, this new system gave the authority powers to give 5% of tax revenues, used for self-operation of the body, adding that, zakat system and tax system will be renewed.

He confirmed that zakat incomes go to Social Security Agency of the Ministry of Labor and Social Development, adding that the authority has all powers to hire professionals and give them employees’ advantages. He anticipated 400 or 500 employees will be added, due to some new projects like, the selective commodity tax and the VAT, and the staff is to reach 2500 employees serving 1.5 million citizens.
 
He added that, the news organization established a Shariah Committee with 5 experts in jurisprudence of financial transactions and accounting of Zakat and regulations, adding that, this committee will be the final reference to the authority, and it will revise the new zakat system to be finally issued. It will also review any work manifestations or problems that will face the authority. Al Sadhan added that this committee is what the authority needs to keep up and adapt with contemporary financial transactions.

Deputy Director of Zakat and Income Tax Authority, Fahad Al – Kharashi said that, tax evasion is limited due to the strict systems, and the VAT is one of the successful experiments all over the world, adding that VAT costs less because it is imposed on consumer goods, easy to monitor, and its revenues make all beneficiaries are obliged to register on the authority’s system. He added that, Saudi Arabia signed an agreement with the US concerning “Fatka” rule, which is specialized in pursuing tax evaders, adding that all the procedures are almost done, and the authority is receiving information from financial institutions, banks, and investment funds, and these information is passed to the American side according to the agreement.