Tax compliance management
Taxes are related to financial operations and their impact extends to all departments and business units in the company. Therefore, to manage it properly and achieve compliance in the company or facility, plan well and ensure that all relevant people in the company and outside it are involved so that they know about their roles in this application process. Because the tax calculation process takes place periodically and throughout the year, It will be important to conduct audits and verify the correct application of tax calculation rules. Below we will provide you with a list of the most important points that will help you raise the level of tax compliance in your facility
Understand the cycle of operations in your facility
Adjusting tax calculations and raising the level of compliance begins with your understanding of the financial operations in the facility. These can be viewed by identifying all flows entering and leaving the facility. Outflows include: Purchases, payments made to suppliers, expenses, etc., The inflows include: Revenues and payments made by customers, etc., This helps determine the type of value-added tax associated with transactions, the mechanism for processing it, and its due date. And whether there are operations to which VAT is not applicable.
Also, in some facilities there may be complex operations, Or a non-specialist cannot determine the correct mechanism for processing and recording it. Therefore, you should not leave this area without trying to reach the correct procedure. Either by contacting the Authority or by requesting advice from a certified tax specialist.
You can choose between managing tax operations internally or by contracting with an office specialized in tax affairs. Each of these options has advantages and disadvantages, You will have to think about it carefully before choosing between them.
Self-management or outsourcing
If you choose self-management, Make sure you review and verify the process cycle and accounting mechanisms used by the facility. Also, make sure that those concerned in the facility are aware and informed of these mechanisms. Do not forget to establish an internal working mechanism or system to verify the commitment of those concerned to follow the instructions specified in the facility.
In the case of choosing outsourcing, You will have to look for a qualified and certified tax professional who is well-versed in your business and its cycle of operations. At the beginning of the contract, try to start working with him early, before the filing deadline. So that he has sufficient time to develop a vision of the facility and its work mechanisms, and to prepare those concerned in the facility to provide him with the data he needs in preparing the acknowledgment or audit report.
One of the pioneering practices in preparing routine returns, Early completion of audit work and financial closure for the period. To give the advisor enough time to review the processes and prepare the tax return without being subject to time pressure. Many companies resort to using a hybrid model that combines self-management and benefiting from outsourcing services to reach the best outputs and reduce tax risks while maintaining reasonable cost levels.
Taking advantage of technical systems
The new electronic invoicing system in its first and second stages, Provide and implement technology as a basic solution for managing and managing billing processes. This in turn, Provide details of financial records at your fingertips in an organized and easy way. and this is, Without a doubt, It will facilitate the process of managing tax compliance because the information will be available without human errors, Quickly and electronically, it can be modified and used.
To make the most of this opportunity, You must ensure that you use an approved system for issuing invoices from the Zakat, Tax and Customs Authority. It uses a good accounting system and supports tax administration as it is in the Kingdom of Saudi Arabia. Remember that technical systems do not correct errors in entries, nor do they perform the correct classification process unless the system is set up correctly and then the complete information is entered correctly later.
Basic obligations of the taxpayer
Every taxable person must evaluate his tax liability and comply with the terms and obligations related to value added tax, This includes registering for VAT upon reaching the registration threshold. Calculating the amount of net tax payable accurately and paying the tax on the due date, as well as maintaining all necessary records and cooperating with the Authority’s employees upon request. If a person is not sure of his obligations, he must contact the Authority through the website or other means of communication. He can also request external advice from a qualified consultant. The following is a presentation of the most important tax obligations stipulated in the system:
- Issuing invoicesThe supplier must issue a tax invoice for each supply subject to VAT for the benefit of another person registered for VAT purposes or for any legal person, or issue a simplified tax invoice if the value of the supply is less than 1,000 Saudi riyals or if the supplies are to natural persons who are not subject to it. Taxable no later than fifteen days after the end of the month in which the supply is made.
- Filing VAT returns: Every person registered for VAT purposes must, or the person authorized to act on his behalf, Submitting a value-added tax return to the Authority for each monthly or quarterly tax period.
- Record keeping: All persons subject to VAT must maintain appropriate tax records relating to the calculation of VAT for audit purposes. This includes any documents used to determine the VAT due on each transaction and in the VAT return. This generally includes the following:
- Tax invoices issued and received.
- Accounting books and documents.
- Contracts or agreements related to large purchase and sale transactions.
- Bank statements and other financial records.
- Import, export and shipping documents.
- Other documents related to calculating VAT.
- Certificate of registration in the value-added tax system: A resident taxable person registered with the Authority in the value-added tax system must place the tax registration certificate for his registration in the value-added tax system at his main place of business and all its branches so that it is visible to the public. As for websites (e-stores), The registration number must be displayed on the home page (or website footer) according to the Authority’s instructions.
