GCC Indirect Tax Weekly Digest
November 19, 2018
UAE FTA publishes new Decision on VAT refunds for overseas tourists
The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published a further Decision on the Tourist Refund Scheme (TRS).
The TRS allows overseas tourists visiting the UAE to reclaim Value Added Tax (VAT) incurred on eligible purchases made through registered retailers, and came into effect on 18 November 2018.
FTA Decision No. (2) of 2018 on Tax Refunds for Tourists Scheme confirms that from 18 November 2018, retailers participating in the TRS shall commence VAT refund procedures. This includes undertaking the relevant checks and issuing claim documentation to eligible tourists. Tourists visiting the UAE may reclaim VAT on eligible purchases at Abu Dhabi International Airport, Dubai International Airport, and Sharjah International Airport.
Tourists may reclaim VAT at other applicable UAE international airports, land ports, and sea ports from 16 December 2018.
The Decision contains the following additional key points:
- The FTA may charge a fee to the tourist of 15% of the amount of refundable VAT and a fixed fee of AED 4.80 per refund claim.
- The maximum cash VAT refund per tourist per 24 hour period is AED 10,000.
- The minimum tax-inclusive purchase value from the same taxable person from whom the tourist requests a refund is AED 250.
- The following goods are excluded from the TRS:
o Goods that are not accompanied by the tourist at the time of leaving the UAE;
o Goods that have been consumed, in full or in part, in the UAE or any other Implementing State; and
o Motor vehicles, boats and aircrafts.
- Retailer procedures for purchases under the TRS, including the checks that the retailer must perform, are detailed in Article 2 of the Decision.
- The operator of the TRS (Planet) will only provide a VAT refund to a tourist if it verifies that the tourist will export the purchased goods outside the UAE within 90 days of the date of supply of the goods.
KSA GAZT publishes agents guidelines in Arabic
The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has issued the Arabic version of its agents guide. The guide provides additional clarity to taxpayers regarding the VAT implications of transactions involving agents, or other situations where one person acts on behalf of another person.
The guide covers topics including the concept of agency for VAT purposes, the VAT treatment where an agent acts on behalf of a principal, the VAT treatment where an agent acts in its own name, importations by an agent, the onward charge of costs by agents, and considerations for specific sectors (including ride-sourcing apps and hotels).
KSA GAZT publishes English version of general VAT guidelines
The KSA GAZT has published the English version of its general VAT guide, which was originally published in Arabic in October. The guide provides information to taxpayers on a wide variety of VAT obligations in KSA.
The guide covers topics such as VAT registration, charging VAT and issuing VAT invoices, deduction of VAT on purchases, filing returns, and interacting with GAZT on VAT matters and disputes.
It also includes useful reference material, such as a tax invoice example, definitions of technical VAT terms, an illustrative VAT return form, and a high-level decision tree for when VAT is expected to be applied.
The guide is aimed at a broad audience and offers a good starting point for all taxpayers with respect to understanding VAT compliance obligations.
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.