Dariba VAT Engine
BlogLog inGet started
VATintra-GCCdeemed supply

Transferring your own goods from the Kingdom to another GCC Member State

Dariba Tax Team·

A business that moves its own goods from the Kingdom to another Member State does not sell them to anyone. The Common VAT Agreement nevertheless treats that movement as a supply unless an exception applies. Article 7 of the VAT Law leaves the terms and conditions for a Taxable Person transferring Goods forming part of its assets in the Kingdom to a Member State, or vice versa, to the Implementing Regulations, and Article 16 of the Regulations sets them out. Article 16 was not amended by ZATCA Board Resolution No. (01-06-24).

The starting point in the Agreement

Article 6(1) of the Agreement provides that a Taxable Person who transports Goods forming part of its assets for the purposes of its business from a place in one Member State to a place in another Member State is deemed to have made a Supply of Goods. Article 6(2) provides that such transportation is not considered a Supply of Goods if it is done for one of the following purposes:

The Kingdom’s rule in Article 16(1)

Article 16(1) of the Regulations provides that a Taxable Person who transfers Goods forming part of its assets from the Kingdom to another Member State is not considered to make a Supply of those Goods, provided that Person can evidence the use or intended use of those Goods for its own temporary use, or for an onward Supply, within sixty (60) days of the Goods being moved to that Member State.

The relief therefore depends on two matters: the purpose of the movement, being temporary own use or an onward Supply, and the availability of evidence within the sixty-day window.

What counts as evidence

Article 16(2) specifies the evidence:

In practice, businesses moving stock or equipment to another Member State should assemble the relevant contract, order or temporary entry documentation at the time of movement, rather than reconstructing it later.

When evidence arrives late

Article 16(3) provides that a person who cannot evidence an excepted purpose within the sixty-day period may adjust the Output Tax accounted for on the Supply of the Goods at such time as the evidence becomes available, subject to the time limitations described in the Law. The text therefore contemplates that Output Tax is accounted for where the evidence is not available in time, with a later adjustment once it is.

Deduction of Input Tax on the transferred Goods

Article 16(4) provides that a Supply of Goods made in the Kingdom on the transfer of a Taxable Person’s own Goods to another Member State, in accordance with the Agreement and the Law, is considered to be a Supply made to that Taxable Person for the purpose of determining the authority concerned with deduction of Input Tax on the supplied Goods. In other words, where the transfer is a supply, the Taxable Person is treated as both supplier and recipient for the purpose of identifying which tax authority deals with the related Input Tax.

Relationship with supplies by a legal person to itself

Article 18(1) of the Regulations provides that Goods and services provided by a legal Person to itself, with the exception of Nominal Supplies, are not within the scope of Tax, and are subject to Article 16. The general rule that a person does not supply itself therefore yields to Article 16 where own Goods are moved from the Kingdom to another Member State.

Instruments relied on: Implementing Regulations, ninth edition, 26/11/1444H corresponding to 15/6/2023G, unofficial English translation, Articles 16 and 18(1) (these provisions were not amended by the text of ZATCA Board Resolution No. (01-06-24) relied on here); VAT Law, Article 7; Common VAT Agreement, Article 6. The Arabic text prevails.

← All VAT & tax articles