The Ministry of Economy and Finance has issued updated guidelines to fuel importers and distributors to ensure the implementation of the government’s measure to reduce the Value Added Tax (VAT) burden on the supply of petroleum products, specifically regular gasoline and diesel.
The ministry reaffirmed that the Royal Government has introduced a VAT relief measure on gasoline and diesel, reducing the rate from 10% to 4%, with the government covering the remaining 6%. The measure has been in effect since March 20.
The ministry instructed wholesalers to apply the 4% VAT rate on domestic supplies of gasoline and diesel in accordance with three principles.
First, tax invoices issued to customers under the self-declaration tax regime must replace the previous “VAT 10%” with “VAT 4%”.
Second, for supplies to final consumers who are not under the self-declaration regime, sellers must issue standard invoices, with the total selling price including VAT calculated at 4%.
Third, VAT paid at either 10% or 4% on imports or local purchases of gasoline and diesel may be claimed as input tax credit, based on the actual amount paid, provided customs declarations, tax payment receipts, or valid tax invoices and supporting payment documents are provided.
Existing VAT regulations continue to apply on goods other than gasoline and diesel.
The General Department of Taxation (GDT) will update the online monthly tax filing system (e-Filing) by adding a new category, “VAT 4%”, under the purchase and sales journal function, to support tax declarations in line with this VAT relief measure.
This guidance went into effect on March 20, and will remain in force until a new decision is made by the Royal Government.
The finance ministry called for the GDT and all importers and distributors of petroleum products under the self-declaration regime to implement this guidance, effective from the date of signing.
