Please note that the reason for the error of imposing VAT at the standard rate in the invoices is attributed to the FTI’s non-awareness aboutof its customers being registered in KSA VAT. Upon the rejection of the invoices by FTI’s customers due to the erroneous VAT treatment and in reference to Article 9 of the
The Unified Gulf Cooperation Council Value added Tax Framework Agreement (GCC Framework):
“When the person subject to the tax in one Member State receives goods or services subject to the tax from a resident person of another Member State, he is treated as if he has supplied these goods or services to himself and thus such supply shall be subject to the tax in accordance with the reverse charge mechanism.”
Based on the above, FTI issued credit notes to cancel the VAT imposed at the standard rate and reported that in the VAT return of quarter-1Quarter-1 2022.