A number of people have been asking lately:
Can NOON in the Middle East still be done?
The answer is definitely can, but the game has completely changed. If the first few years can still rely on the difference in information to make money, it is now spelled out in the refinement of the operation. The first hurdle in the refinement of the operation, but also more than 90% sellers are miscalculated, is that theSaudi VATThe

Many Middle East cross-border sellers have always had a misunderstanding: they feel that the platform sales data is only known to themselves and the platform, and no one else can check it. But the reality is that Saudi Arabia's tax and customs have been unified by Zakat, Tax and Customs Authority. As e-commerce regulation becomes more and more perfect, import data, platform sales data, VAT declaration data, will definitely be cross-referenced in the future.

That's why, we recommend that sellers who have been in the Middle East for a long time, set up a compliant business structure from the start. For example, layout in advanceOverseas Company RegistrationIt is not only a solution to the tax status problem, but also a foundation for a long and deep commitment to the market.Enterprise Finance GroupWhen providing cross-border sellers with Middle Eastern company registrations such as Saudi Arabia and the UAE, it has been found that compliant companies are significantly more comfortable in dealing with tax scrutiny.

But in the actual operation, I found a more fatal problem: people simply do not know where they lose. Most people only know a sentence: Saudi Arabia VAT is 15%. can really do NOON, once the wrong VAT, there will be a situation: orders look more, sales are rising, the end of the month once the accounts, profits somehow less a large piece.

Many sellers told me: obviously the gross profit is calculated to be 15%, and the actual direct shortfall is 5 points. The problem is not at all that the product is not profitable, nor is it that the platform costs are high, but: from the beginning, there is no accurate understanding of Saudi VAT. Many people do not know that the selling price of the Saudi Arabia e-commerce platform is the default price including tax. Still using the simplest “selling price × 15%” to calculate the tax, the profit is definitely not right.

One, NOON selling price is tax included, this is the start of all the mistakes

In the Saudi Arabia e-commerce platform, consumers see the price, all the price including 15% VAT. For example, the page price: 100 SAR, the majority of sellers first reaction: VAT = 100 × 15% = 15. This is completely wrong.

Correct Algorithm:
Sales excluding tax = 100 ÷ 1.15 ≈ 86.96 SAR
VAT = 13.04 SAR

Your pricing model is fundamentally wrong for the income statement if you don't break out taxed and untaxed. What's even scarier is that a lot of sellers are makingODI FilingAfter that, the funds are compliant out of the country, but because the source profits are miscalculated, the whole closed loop of the return of the funds is biased.Enterprise Finance GroupThe first step in assisting clients with ODI filings and fiscal planning is to help companies calibrate this profit model.

Second, NOON has VAT on every expense, what kind of money is it?

Many sellers are confused when they look at the bill: commission has VAT, warehousing has VAT, logistics has VAT, advertising also has VAT, and some people even think: the platform helps me to pay the sales VAT. This is not the case at all.

NOON is a platform that provides you with a service, and in Saudi Arabia, service income must be paid 15% VAT. so the platform deduction structure is:
Service charge (before tax) + 15% VAT

Example: Commission 100 SAR (see clearly oh, this is the commission, not the sales price) + VAT 15 SAR = actual deduction 115 SAR. 15 VAT here, not to help you pay sales tax, but the platform service fees generated by the tax, borne by you, the platform to pay the tax bureau. Simply put: you help the platform to pay its tax, but your own sales VAT, not a penny less.

III. VAT for platform fees, which can be legally deducted

Sellers who know what they're doing are already doing itTax ComplianceOptimized. vat core formula:VAT payable = VAT on sales - VAT on imports

Give me a practical example:

• Sales generating sales VAT: 1500 SAR
• Platform fees (commissions, logistics, advertising) incoming VAT: 450 SAR
• Final due: 1500 - 450 = 1050 SAR

It's not tax evasion, it's a regular credit. But for sellers who don't understand it, the 450 SAR is all sunk costs. Here also exposes a problem: many merchants who make low-priced products with a gross margin pricing of 10%, in fact, because they do not count the logic of the platform VAT credit into the pricing model, resulting in a real gross margin of not even 5%. If you even the basicbookkeeping and tax preparationIt's all a mess, and those hidden profits are simply not recoverable.Enterprise Finance GroupOur Middle East market tax advisors can help you sort out these deductions and “get back” the overpayment of tax.

IV. The moat of long-termism: compliance before it's too late

Middle East e-commerce is becoming more and more mature, and VAT compliance is no longer optional, but a basic ability. Especially after Saudi Arabia's tax and customs unification, import volume, sales, and declaration data, the three will become more and more transparent.

Many of my friends who are just starting out have asked me if they can just register a shell company with any agent. My advice is to never bury a big mine in order to save a small amount of money. FromOverseas Company Registrationuntil (a time)Bank account opening, and then to the annualAnnual company audit auditsrespond in singingTax Declaration, which is a whole set of interlocking lifelines. If any of the links are broken, for example, if the company doesn't have a timely annual audit resulting in an abnormal status, your store could be at risk of being shut down. We've seen too many cases like this that ended up with aEnterprise Finance Groupemergency measuresChange Informationand compliance processing to remedy the situation, but lost sales time cannot be made up.

One last honest word:
Doing Middle East e-commerce, everyone is rolling the selection, rolling the ads, rolling the traffic, but very few people are seriously counting the tax, counting the profit structure. But really decide whether you make money or not, often not sales, but: have you counted the VAT right, there is no underlying structure to build a good. Business to the end, the fight is not a moment of fast feet, but who has a more solid foundation, whose business services supply chain is more reliable.

At the end of the article, we also think about it: if you want to layout Southeast Asia, Japan and South Korea, or Europe and the United States in addition to the Middle East market, now you can use professional organizations to do a one-stop co-ordination. Whether you need to do for complianceODI FilingI still want to take one.Hong Kong IdentityFacilitate international travel or apply for a groupSingapore EPOr, if you need a professionalCross-border e-commerce accompanied by running on behalf of the operationAll of these can be put together with VAT compliance into a unified plan for your global business landscape.

You need or interested in any time to contact me (consulting phone: 16620947137, add WeChat: Qicaiyingjituan). Enterprise Caiying Group specializes in providing Shenzhen, Guangzhou, Shanghai, Beijing, Hangzhou, Hong Kong, the United States, Japan, South Korea, Southeast Asia, Singapore, BVI, Cayman and other domestic and international company registration services, company annual audit/audit/tax bookkeeping/tax compliance/change of information/bank account opening/ODI filing/FDI filing and other corporate services, Hong Kong identity application/renewal/permanent residence services, Singapore EP application services. One-stop services such as cross-border e-commerce accompanying and operating on behalf of the company.

We all share and learn together. If you are in NOON or Saudi e-commerce VAT On there are other questions, also welcome to leave a message to discuss. If this article is helpful to you, click a like or forward it to a friend who is doing the Middle East, it may help him to step on one less big pit that eats up profits.