1) As an exception to the requirement to use the invoice accounting basis described in article forty-five of these Regulations, a Taxable Person may apply to calculate Net Tax due for a Tax Period on a cash accounting basis provided that the annual value of Taxable Supplies in the past calendar year does not exceed five million (5,000,000) riyals, and the anticipated value of Taxable Supplies in the current calendar year is not expected to exceed five million (5,000,000) riyals, subject to the second paragraph of this article.
The Authority shall notify the Taxable Person whether his application has been approved.
2) A Taxable Person who has received notification of a VAT violation in the last twelve months is not eligible to use the cash
accounting basis.
3) A Taxable Person using the cash accounting basis shall only include Output Tax and Input Tax in its Tax Return in respect of Supplies of Goods and services for which and to the extent that payment has been made.
4) A Taxable Person may apply to use the cash accounting basis at the time of his application for registration or to obtain his Tax Identification Number with the Authority. A Taxable Person who has not applied in this manner may, at any subsequent time apply to use the cash accounting basis by filing an application with the Authority, provided he is eligible to do so.
5) A change to the cash accounting basis takes effect from the start of the Tax Period following that in which the application is approved. The Authority must provide notification of the approval and the effective date of the change to the Taxable Person.
6) The Tax Return for the first Tax Period following a change from the invoice accounting basis to the cash accounting basis must include an adjustment to the Taxable Person’s Output Tax and Input Tax to reflect the Tax calculated on the amounts unpaid in respect of Taxable Supplies made to or by the Taxable Person at the date of the change.
7) The Authority may require evidence of the Taxable Person's turnover to be submitted and may reject an application if it is not satisfied that the Taxable Person is eligible to use the cash accounting basis.
8) A Taxable Person who is approved to use the cash accounting basis must inform the Authority within twenty (20) days of finding that he is no longer eligible to do so, by submitting an application to use the invoice accounting basis as described in article forty-five of these Regulations.
9) A Taxable Person using the cash accounting basis may voluntarily elect to use the invoice accounting basis after the cash accounting basis has been used for a minimum of two (2) years, by submitting an application.
10) The change to the invoice accounting basis takes effect from the start of the following Tax Period. The Authority shall provide notification to the Taxable Person of the change and its effective date.
11) The Tax Return for the first Tax Period following a change from the cash accounting basis to the invoice accounting basis must include an adjustment to the Taxable Person’s Output Tax and Input Tax to reflect the Tax calculated on Taxable Supplies made by or to the Taxable Person without payment by the effective date of the change.
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