SAUDI ARABIA

Meru Accounting delivers top-level outsourced accounting and bookkeeping services for businesses in Saudi Arabia. Our expert team understands the local financial regulations and uses the best accounting software customized to the region. We provide comprehensive financial management solutions that simplify your business processes and ensure compliance with Saudi regulations. 

In Saudi Arabia, the main indirect tax law that governs taxation on goods and services is the Value Added Tax (VAT) law, which was implemented starting from January 1, 2018. 

The key aspects of the indirect tax laws in Saudi Arabia:

1. Value-Added Tax (VAT):  In Saudi Arabia, a standard Value-Added Tax (VAT) of 15% is applied to the supply of goods and services. Certain goods and services could qualify for a lower VAT rate of 5% or be entirely exempt from VAT. The General Authority of Zakat and Tax (GAZT), now part of the Zakat, Tax, and Customs Authority (ZATCA), oversees the administration and enforcement of VAT.

2. Scope of VAT: It applies to a broad range of goods and services, including imports into Saudi Arabia. It covers various sectors such as retail, construction, financial services, telecommunications, and more.

3. VAT Returns: Businesses must file VAT returns with the General Authority of Zakat and Tax (GAZT) regularly. 

4. Exemptions and Zero-Rated Supplies: Certain goods and services are exempt from VAT, such as healthcare, education, and some financial services.

5. Penalties and Enforcement: Non-compliance with VAT regulations, such as late filing or incorrect reporting, may lead to penalties imposed by GAZT.

In Saudi Arabia, companies utilize diverse software tools for accounting and bookkeeping to handle their financial records and adhere to tax laws.

A few of them are listed below:

1. Tally ERP 9: It is extensively utilized around the world, including in Saudi Arabia. Tally. ERP 9 is a comprehensive accounting and business management software that supports various accounting functions such as financial management, inventory management, payroll processing, and compliance with VAT regulations.

2.QuickBooks: It is a popular choice for small to medium-sized businesses in Saudi Arabia. It offers features for bookkeeping, invoicing, expense tracking, and financial reporting, and also supports VAT calculations and reporting, making it suitable for businesses in compliance with Saudi VAT laws.

3. Sage 50 cloud: This is another robust accounting software used by businesses in Saudi Arabia. It offers capabilities in accounting, invoicing, budgeting, and managing inventory. It can handle VAT calculations and reporting, helping businesses meet Saudi VAT requirements.

4. Xero: It is a cloud-based accounting software known for its user-friendly interface and collaboration features. It offers functionalities for invoicing, bank reconciliation, expense tracking, and generating financial reports. It supports multi-currency transactions and integrates with various third-party applications.

5. Oracle NetSuite: It is a cloud-based ERP solution that includes modules for financial management, order management, inventory, and CRM. It is suitable for larger businesses in Saudi Arabia looking for integrated accounting and business management capabilities.

Saudi Arabia's currency is known as the Saudi Riyal, symbolized by SAR or ?.?. One Saudi Riyal is divided into 100 smaller units known as halalas. Riyal is the currency embraced, Integral to bookkeeping and accounting with grace. Its stability and global recognition are profound, Ensuring financial records are accurately bound.

The Saudi Riyal is set accordingly with the US Dollar at a fixed rate of 3.75 SAR to 1 USD. This pegging ensures stability and predictability in international trade and foreign exchange transactions.

The official language of Saudi Arabia is Arabic. Specifically, Saudi Arabic is widely spoken throughout the country. Modern Standard Arabic (MSA) is used in formal settings, such as in government, media, and education. Additionally, due to the presence of a large expatriate population, languages such as English, Urdu, and Tagalog are also spoken.

The primary language for business and official communication in Saudi Arabia is Arabic. Accounting records and financial reports must be maintained in Arabic. However, English is also commonly used, especially in multinational companies and among expatriates and its also the primarily language for accounting and bookkeeping records  as the language is familiar with most of the population.

 Managing payroll in Saudi Arabia involves several key considerations due to the country's specific labour laws and regulations.

The main aspects of payroll in Saudi Arabia:

Social Insurance Contributions:

Employers in Saudi Arabia are required to contribute to various social insurance schemes for their employees. These include:

General Organization for Social Insurance (GOSI):

Contributions are made towards pension, disability, and death benefits.

Health Insurance:

Such kinds of contributions are made towards health insurance coverage for employees and their dependents.

Employment Contracts and Compliance:

Employment contracts in Saudi Arabia must comply with the labour   laws and regulations set forth by the Ministry of Human Resources and Social Development (MHRSD). These agreements provide a clear overview of salary specifics, benefits, working hours, and other employment conditions.

Payroll Processing and Software:

Many companies in Saudi Arabia use payroll software or engage payroll service providers to manage payroll efficiently. These systems help calculate salaries, deductions, social insurance contributions, and taxes accurately.

Year-End Procedures:

At the end of each fiscal year, employers must issue year-end statements detailing employees' earnings, deductions, and contributions made to social insurance schemes.

In Saudi Arabia, Generally Accepted Accounting Principles (GAAP) are primarily guided by the accounting standards issued by the Saudi Organization for Certified Public Accountants (SOCPA). 

The key aspects of GAAP requirements in Saudi Arabia:

1. SOCPA Accounting Standards:

SOCPA issues accounting standards that govern the preparation and presentation of financial statements for entities in Saudi Arabia. Disclosure and Transparency: GAAP in Saudi Arabia places significant emphasis on the disclosure of information in financial statements to ensure transparency and accountability. Companies are required to disclose significant accounting policies, estimates, related party transactions, and other relevant information.

2. Updates and Revisions:

SOCPA regularly updates and revises its accounting standards to align with international best practices and changes in business environments.

3. Penalties for Non-Compliance:

Non-compliance with GAAP and financial reporting requirements can result in penalties imposed by regulatory authorities.

4. Consolidated Financial Statements:

Listed companies and larger entities may be required to prepare consolidated financial statements if they have subsidiaries or other entities under their control. Consolidation principles follow GAAP guidelines for the aggregation of financial information and elimination of intercompany transactions.

At Meru Accounting, we help businesses in Saudi Arabia handle complex financial rules, especially around VAT, bookkeeping, payroll, and audits. Using top software and innovative technology, we make sure VAT is reported correctly, payroll is managed smoothly, and financial statements meet all rules. We keep everything transparent and follow Saudi regulations carefully, so businesses can focus on growing without worrying about their finances.