Got your car insurance money short? Get your VAT back
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Got your insurance money, but it’s less than what the Taqdeer report said?Most likely, the missing amount is VAT. Car insurance companies in Saudi are required to pay you back in full, they have a standard practice of keeping the VAT until you submit your e-invoice.
Want to know how to get what’s rightfully yours? Here’s what you need to know about VAT and car insurance claims in Saudi Arabia
Car insurance claims are VAT-free
Both the Zakat, Tax and Customs Authority (ZATCA) and the Saudi Insurance Authoirty confirm that car insurance claims are not subject to VAT. This means you should receive the full amount needed for your car repairs, as shown in the Taqdeer report.
So, why do insurance companies deduct VAT in the first place? It’s because they consider Taqdeer report only an estimate, not a tax invoice. When you provide your e-invoice, the VAT is refunded to you.
VAT in Saudi Arabia
Since 2018, the 15% VAT in Saudi Arabia has been applied to most commercial goods and services, including car insurance prices.
How to get the VAT amount back from insurance
To process your VAT payment, you only need one thing: the tax invoice for parts and labor needed to repair the car.
What does a Tax e-invoice look like?
Car insurance companies in Saudi will only accept an electronic tax invoice from workshops. An e-invoice will have:
In Saudi Arabia, an electronic invoice is a digital document issued and stored electronically following ZATCA requirements.
- A QR to verify the authenticity
- Seller (workshop) VAT number
- The quantity and type of goods or services supplied (repair labor, spare parts, etc.)
- Car details (make, plate number, chassis number).
- Amount before VAT
- Applied VAT rate (15%)
- VAT amount in Saudi Riyals
Insurance money still feels a little light?
Besides VAT, there are only a couple of reasons you get less money than the Taqdeer report.
- your fault: Car insurance will apply your deductible if the accident was your fault. (Deductible don’t apply if the other driver was 100%)
- old parts: If they replace old parts on your car, a small amount may be deducted for depreciation, but this must be clearly stated in your policy.
Don’t leave your rights on the table!
If the insurance company refuses to refund the VAT or delays more than 3 business days, you should file a complaint with the Saudi Insurance Authority.
Save money from the start
To sum it all up, accident claims are not subject to VAT. You have the right to reclaim any VAT that was deducted by simply providing a valid electronic invoice. The only VAT you should be paying is the 15% on the car insurance price itself. Use comparison websites to get the best car insurance prices and offers in Saudi Arabia.
