For the Investment Metals Sector

3. Economic Activity and Registration for VAT Purposes 3.1 Who Conducts an Economic Activity? An Economic Activity may be conducted by both natural and legal persons. Legal persons (such as companies) are considered to conduct an Economic Activity where they carry out regular activities involving supplies. Natural persons may carry out certain activities as part of their Economic Activity or as part of their private activities. Special rules apply to determine whether a natural person falls within the scope of VAT. Natural and legal persons conducting an Economic Activity must register for VAT if the registration requirements are met. They must also collect VAT applicable to their activities and remit it to the Authority along with their periodic returns. 3.2 Mandatory Registration Registration is mandatory for all persons whose annual revenues exceed a specified threshold. Where a person’s taxable supplies exceed SAR 375,000 over a period of 12 months (“Mandatory Registration Threshold”), that person must register for VAT purposes7, subject to the transitional provisions set out in the Implementing Regulations relating to the Mandatory Registration Threshold during the transitional period. Supplies not to be included in the calculation of the registration threshold8: Exempt supplies, such as exempt financial services or exempt real estate supplies9. Supplies falling outside the scope of VAT in any GCC Member State. Proceeds from the sale of Capital Assets, defined as long-term commercial assets10. In certain cases, other criteria apply for Mandatory Registration: Non-resident persons making or receiving supplies in the Kingdom and liable to pay VAT in the Kingdom must register for VAT regardless of the value of their supplies11. Further information on Mandatory Registration is available at zatca.gov.sa. 7 Article 50, Mandatory Registration, Unified Agreement for VAT 8 Article 52, Calculation of the Value of Supplies, Unified Agreement for VAT 9 Articles 29 and 30, Implementing Regulations 10 Article 1, Unified Agreement for VAT 11 Article 5, Mandatory Registration of Non-Resident Persons Liable to Pay Tax in the Kingdom, Implementing Regulations 3.3 Voluntary Registration A resident person whose taxable supplies or taxable expenses exceed SAR 187,500 (“Voluntary Registration Threshold”) over a 12-month period may apply for voluntary VAT registration12. Further information on Voluntary Registration is available at zatca.gov.sa. 4. Investment Metals: Zero-Rated Supplies Supplies of Investment Metals are supplies of goods where the supply includes the transfer of ownership or the right to dispose of specified ingots, bars, plates, wafers, or other Investment Metals. Supplies of Investment Metals are treated in two ways13: Supply of Goods: A supply of Investment Metals is considered a supply of goods when it involves the transfer of ownership or the right to dispose of them, whether in the form of ingots, wafers, plates, or coins minted for investment purposes. Supply of Services: A supply of Investment Metals is considered a supply of services where the metals may be leased or sold on a general “non-specified” basis. When Investment Metals are sold on an “unallocated” basis, the purchaser acquires the right to a specified quantity of metal, which remains in the possession of the supplier. The purchaser does not obtain ownership of specified tangible goods. Accordingly, sales of Investment Metals on an “unallocated” basis and leasing thereof constitute supplies of services for VAT purposes. 12 Article 7, Voluntary Registration, Implementing Regulations 13 Article 5 – Supply of Goods, Unified Agreement for VAT