For the Investment Metals Sector

Application of the Value Added Tax Law in the Kingdom of Saudi Arabia The Kingdom of Saudi Arabia ratified the Unified Agreement for Value Added Tax of the Cooperation Council for the Arab States of the Gulf (GCC) pursuant to Royal Decree No. (M/51) dated 5th Jumada Al-Awwal 1438H/2nd February 2017G (the “Unified VAT Agreement”). Based on the provisions of the Unified VAT Agreement, the Kingdom of Saudi Arabia issued the Value Added Tax Law pursuant to Royal Decree No. (M/113) dated 2nd Dhu Al-Qa’dah 1438H/26th July 2017G (the “VAT Law”), as well as the Implementing Regulations of the VAT Law pursuant to Resolution No. 3839 dated 14th Dhu Al-Hijjah 1438H/5th September 2017G issued by the Board of Directors of the General Authority of Zakat and Income Tax – formerly – and the Zakat, Tax and Customs Authority – currently – (the “Implementing Regulations”), as amended by subsequent Board Resolutions. 1.1.1 Zakat, Tax and Customs Authority Pursuant to Cabinet Resolution No. 570 dated 22nd Ramadan 1442H / 4th May 2021, the General Authority of Zakat and Income and the General Customs Authority were merged into a single entity under the name of the Zakat, Tax and Customs Authority. The Authority is responsible for the collection of zakat, taxes, and customs duties, ensuring the highest level of compliance by taxpayers according to best practices and with high efficiency. It also seeks to enable the Kingdom to become a global logistics hub by facilitating trade, safeguarding national security, and regulating and managing all customs-related activities and ports to achieve maximum efficiency, productivity, and competitiveness. The Authority provides high-quality services with a strong focus on the customer and service excellence according to best practices. 1.1.2 What is Value Added Tax? Value Added Tax is an indirect tax imposed on the import and supply of goods and services at each stage of production and distribution, subject to certain exceptions. VAT is applied in more than 160 countries worldwide. VAT is a consumption tax that is paid and collected at each stage of the supply chain, starting from the manufacturer’s purchase of raw materials through to the retailer’s sale of the final product to the consumer. Unlike other taxes, persons subject to VAT will: Collect VAT from their customers on each taxable sale in accordance with the applicable percentage rate. Pay VAT to their suppliers, where applicable, on each taxable purchase at the applicable percentage rate. When a taxable person sells goods or provides services, they must charge VAT at the rate of 15% (assuming the standard rate applies to those supplies), in addition to the final selling price. Taxable persons must account separately for the 15% collected on taxable sales from their revenues and remit it to the Authority. The VAT collected on their sales is referred to as “Output Tax.” Similarly, VAT at the rate of 15% is added to purchases of goods and services made by taxable persons (assuming the standard rate applies to those supplies). The VAT paid to their suppliers is referred to as “Input Tax.” For more information on VAT, please refer to the VAT Guideline available on the website zatca.gov.sa.