Dear ZATCA Team,
We would like to seek clarification regarding a scenario related to invoicing and tax compliance.
Currently, we have two legal entities within our organization:
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One company registered in Saudi Arabia
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Another company registered in Dubai (UAE)
In the present case, the purchase and sale transactions are happening entirely within Dubai, meaning the goods are purchased in Dubai and also sold to customers within Dubai. However, our Dubai entity has not yet received confirmation/approval from the Federal Tax Authority (FTA) to generate tax invoices.
Due to this situation, we wanted to check whether it is permissible to issue the invoice using our KSA entity as the seller, with the Dubai customer as the buyer, and treat the transaction as an export or out-of-scope supply and No VAT is applied under KSA e-invoicing regulations.
We request your guidance and confirmation on whether this approach is permissible or if the transaction must strictly be invoiced by the Dubai entity under UAE VAT regulations once the necessary approvals are obtained.
If we generate on this case means what will be consequences might be occur from the ZATCA Tax Authority.
Kindly review and advise on the correct approach.