GCC Indirect Tax Weekly Digest
September 1, 2020
FTA publishes updated guide on VAT refunds for UAE nationals building new residences
The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published an updated version of its guide on Value Added Tax (VAT) refunds for UAE nationals building new residences.
The guide has been updated with details about the scheme, whereby UAE nationals who own or acquire land in the UAE on which they build or commission the construction of their residence may request a refund of the VAT incurred on certain expenses related to the construction.
The guide further clarifies the FTA’s interpretation of what it considers a ‘residence’ for the purposes of the scheme, and criteria for recoverable expenses. In addition, Appendix 3 includes a table setting out eligible and non-eligible expense items.
NBR publishes VAT Public Clarification on six month loan payment holiday
The Bahrain National Bureau for Revenue (NBR) has published a new VAT Public Clarification on the VAT implications of the six month payment holiday for loans for Bahraini nationals and businesses which was applicable from March to August 2020.
The NBR sets out the following:
- Financial institutions subject to the policy should not recognize any supply as being made in relation to the affected loans in the six month period, except where a VAT invoice has been issued or payment has been received.
- When computing the amount of input VAT claimable on residual expenses for a VAT period falling within the six month period, interest or profit payments deferred under the extension should be excluded from the calculation (except where there was VAT due after the end of the holiday but within the VAT period).
The NBR further states that financial institutions that have recognized supplies in relation to the affected loans within the six month period should amend their submitted VAT returns.
Update on VAT Law
VAT is one of the priority items the Majlis Al Shura will deal with in the next session starting Wednesday, 1 September 2020.
As a matter of urgency, the Shura will review the report of the Joint Committee between the State Council and Shura Council on the VAT Law.
This digest is for information purposes only and should not be construed as advice. It does not necessarily cover every aspect of the topics with which it deals. You should not act upon the contents of this alert without receiving formal advice on your particular circumstances.