GCC Indirect Tax Weekly Digest has been saved
GCC Indirect Tax Weekly Digest
May 26, 2022
Guide issued on treatment capital assets adjustments for businesses engaged in taxable and exempt supplies
The Oman Tax Authority (OTA) has published a Value Added Tax (VAT) guide in Arabic for capital assets adjustments. The guide provides interpretation and guidance on the application of the VAT Law and Executive Regulations surrounding the purchase and use of capital assets. The guide is more relevant to businesses engaged in the supply of taxable and exempt supplies such as financial institutions, hospitals, transportation, real estate, among others.
The document also lays out “Administrative Practice”, which requires careful reading – these are in essence the approaches accepted by the OTA in consultation with the industry to facilitate the taxpayers’ compliance.The guide is available here.
The guide covers the following topics in relation to capital assets adjustment:
- Input tax deduction on initial acquisition of capital assets;
- Adjustment for change of use;
- Sale or disposal of Capital Assets;
- Administrative practice for VAT;
- Assigning Capital Assets in other than business activity.
Intensification of tax scrutiny by the OTA to ensure businesses have fulfilled their VAT obligations
With VAT in Oman having been live for over a year now, we are witnessing the OTA getting more actively engaged with the administration of the VAT legislation and intensifying its efforts to ensure that businesses remain diligent with their VAT compliance. The expectation is that businesses fulfil their obligations by filing VAT returns and correctly paying due tax in a timely manner.
In the recent past, we have observed the OTA adopting a range of measures for the proper administration of VAT, including:
- Issuing of notices to businesses, to seek clarification on information submitted through VAT returns and the taxpayers checklist;
- Levy of penalty for non-filing of VAT returns;
- Additional tax for delay in payment of taxes; and
- Notices for VAT assessments.
We have also noticed cases where the OTA has sent text messages to the taxpayer, to appear before the relevant tax officers and provide clarification for not filing their VAT return within the prescribed timelines. Additionally, it is also mentioned that failure to attend/not providing statement would invite fines up to OMR 5000.
It is thus important for businesses to continue monitoring their VAT compliance, and seek guidance and assistance when in doubt.
ZATCA and taxpayer engagement
The Kingdom of Saudi Arabia (KSA) Zakat, Tax and Customs Authority (ZATCA) has recently started to formally engage with taxpayers through a series of workshops.
These meetings have been set-up to help solicit feedback around how to improve and streamline certain areas of the various taxes in Saudi Arabia and their practical application.
It is clearly helpful to see a constructive dialogue in this respect between the ZATCA and taxpayers, with a view that the various tax reforms that are occurring in the Kingdom can be adapted into practice in a more coherent and practical manner.
Executive Office for Control and Non Proliferation facilitates awareness workshops and roundtables on the implementing of Targeted Financial Sanctions.
Following the grey listing of the UAE by the Financial Action Task Force (FATF) in March 2022, the UAE continues to live up to its commitment to strengthen the effectiveness of its Anti Money Laundering (AML) and Combatting Financing of Terrorism (CFT) regimes through implementing the steps as prescribed in the UAE’s FATF action plan.
A key step to implement the FATF action is for the UAE to proactively identify and combat sanctions evasion by using detailed TFS guidance in sustained awareness-raising with the private sector and demonstrating a better understanding of sanctions evasion among the private sector. In this respect, the Executive Office for Control and Non Proliferation is facilitating a program of workshops and roundtables on the implementation of Targeted Financial Sanctions for industry sectors throughout the year.
The program kicked off with the April TFS Summit 2022 hosted on Expo 2020 and is expected to run until November 2022. Given the requirements of the UAE FATF action plan, more sessions may expected to be organized.
Notable sessions that can still be attended are:
- Implementing TFS as per UNSCR 1373 Outreach session on 31 May
- TFS Implementation & Combating Sanctions Evasion Outreach session on 8 June
- Proliferation Sanction Evasion Workshop on 22 September
- TFS Challenges and Solutions Roundtable - Banking Sector and Securities on 24 October
- TFS Challenges and Solutions Roundtable – DNFBPs on 27 October
More details can be found on the website of the Executive Office for Control and Non Proliferation.
On April the 17th the president of Egypt excludes production of supplies and raw materials from import measures
President Abdel-Fattah El-Sisi excludes production requirements (artifact used in the product development process) and raw materials from import measures (rules and procedures for importers). The president also directed the Government to conduct periodic follow-up and regular examination of import procedures.
Nevine Gamea, Egypt's Minister of Trade and Industry, issued a decree in March amending rules controlling the registration of manufacturers eligible to export their products to Egypt, with the goal of simplifying procedures for businesses and establishing precise registration dates. Furthermore, the amendment states that businesses seeking to export to Egypt must renew documents that have reached the end of their validity period within 30 days of the expiration date. On 17th April, the General Organization for Import and Export Control (GOEIC) halted the import of products from 814 foreign and local factories and businesses. According to the GOEIC, these companies have been denied the right to export to Egypt's domestic market due to the expiration of their certifications and for failing to comply with Resolution No.43/2016 on the registration of factories qualified to export their products to Egypt.
In result of the above, the GOEIC's Resolution No. 43/2016 clarified a number of goods that require factory registration in Egypt, including dairy and its products, imported fruits, oils, sugar products, carpets and floor coverings, apparel, textiles and furnishings, and home lighting equipment.
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.