GCC Indirect Tax Weekly Digest

UAE developments 

FTA publishes amended Decision on Marks for Designated Excise Goods

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published an amended version of the Decision relating to the Marking of Tobacco and Tobacco Products Scheme (also known as the Digital Tax Stamps (DTS) scheme).

FTA Decision No. 3 of 2022 amends the previously published FTA Decision No. 3 of 2021 which set out a new design for Marks.

The scope and timeline of the DTS scheme has been expanded with the following:

• 31 December 2023 – local markets and duty free markets in arrival and departure terminals must prevent the supply, transfer, storage or possession of designated excise goods in the UAE using marks with the old design.

The DTS scheme is intended to regulate the sale of tobacco products and avoid tax evasion and the illegal trade of these products.

FTA publishes Decision on time limits for refunds under the Tourist Refund Scheme

The UAE FTA has published a Decision setting out the time limit for Value Added Tax (VAT) refunds to be claimed under the Tourist Refund Scheme (TRS).

FTA Decision No. 4 of 2022 states that the operator of the TRS shall set a one-year time limit for tourists to claim VAT refunds from the date of verification of the refund request and must include this time limit in its published list of terms and conditions.

Further, if the operator of the TRS has any unclaimed tax amounts for which the time limit has been exceeded, the operator must deliver the funds to the FTA within one month of expiration of the time limit.

The TRS allows overseas tourists visiting the UAE to obtain refunds of VAT incurred on certain eligible purchases made in the UAE.

Dubai Customs issues notice on simplifying customs procedures for clearance of goods consignments via courier companies

Dubai Customs issued the new customs notice on 22 June 2022, which will become effective from 1 January 2023, to facilitate and simplify customs process and procedures in relation to the clearance of goods consignments through courier companies based in Dubai.

Key highlights of the notice are as follows:

• Goods consignments with a value less than AED 300, imported by courier companies, shall be exempted from the customs duties. (This will not include tobacco, tobacco products, e-cigarettes, nicotine liquids, alcoholic beverages and foods containing alcohol).
• According to Article (3) of the notice, to simplify customs process and procedures (i.e., customs clearance, electronic customs declarations, and invoices) would be accepted for:
  • Goods consignments imported in the Dubai Mainland worth no more than AED 300
  • Goods consignments exported/in transit for value worth no more than AED 3000
• In addition, the e- documents (i.e., the customs declarations and invoices) along with the courier import/export/in transit form needs to be submitted on the Business to Government e-channel for: 
  • Imported goods consignments of value higher than AED 300
  • Export/transit goods consignments for a value higher than AED 3,000
  • Incoming/outgoing and in transit consignments to/from free zones and warehouses
  • Goods and products are listed in article (2) paragraph (b).
• According to Article (5), no customs service charge will be applied for consignments of value lower than AED 3,000. For goods consignments with values ranging between AED 3,000 and AED 15,000, a service charge of AED 10 shall apply. 
• In addition, request for refund claim on customs deposit, shall be submitted electronically along with supporting documents (as per the legislation and provisions)
• Furthermore, the release of customs guarantee/deposits and claims on customs declarations shall also be settled electronically.

For the full notice please refer to the following link. 

Dubai Customs postpones entry into force of Customs procedures on cross-border e-commerce

Dubai Customs issued a subsequent notice on 22 June 2022, stating that they have decided to postpone the date of entry into force of the Customs notice No (15/2021) on Customs procedures on Cross-border via e-commerce companies from 01/01/2022 to 01/01/2023. 

The decision was granted in response to multiple requests from business owners to facilitate and grant additional time for businesses to adapt and upgrade their electronic systems to ensure smooth and effective execution. 

For the full notice please refer to the following link. 

Implementation of the Comprehensive Economic Partnership Agreement between the UAE and Indonesia 

The Comprehensive Economic Partnership Agreement (CEPA) between the Governments of the United Arab Emirates (UAE) and the Republic of Indonesia (Indonesia) was signed on 1 July 2022. 

The CEPA is expected to enhance a strong and stable trade relations between the 2 countries which will also allow better efficiencies in manufacturing processes and input for businesses operating in both countries. 

The CEPA holds numerous and valuable opportunities for businesses who seek to setup more optimized supply chains and operate at lower manufacturing and market access costs which include but not limited to ZA:

• improving market access, eliminating duties and customs barriers on a variety of goods and services;
• raising the total value of trade in services to $630 million by 2030;
• usher in a new era of economic growth and increase non-oil trade between the two countries to more than USD 10 billion annually within the next five years. 
• Moreover, by 2030, it will also provide 50,000 jobs in the UAE for professionals.

KSA developments

ZATCA initiates procedures for implementing the integration phase of electronic invoicing

After concluding the public consultation on 10 June 2022, the Kingdom of Saudi Arabia (KSA) Zakat, Tax and Customs Authority (ZATCA), has published the updated electronic invoicing (e-Invoicing) Implementation Resolution in Arabic on 24 June 2022. 

The Implementation Resolution is part of the earlier released e-Invoicing Regulations issued on 4 December 2020. This latest Resolution, annexes and related technical specifications will be relevant for the integration phase that will go live on 1 January 2023. The English version has not been published yet.

We consider this publication as a marker that the wheels have been set in motion and Deloitte being your trusted Tax Technology partner, is ready to support you to comply with e-Invoicing requirements in a cost effective and timely manner.

For further details, please refer to Deloitte’s recent alert.

ZATCA published additional suggested amendments to the Excise Tax implementing Regulations for public consultations

On 4 July 2022, ZATCA published suggested amendments to a number of provisions in the Excise Tax implementing Regulations for public consultation which will end by 30 July 2022. 

The proposed amendments affect articles 17, 18 and most importantly 26 of the Excise Tax implementing regulations whereby the aim of ZATCA is to provide additional facilitations to holders of Excise products to obtain tax warehouse licenses which allows for more cash flow flexibility by deferring the tax payment date, in addition to clarifying the procedures of self-disclosure and settlement of any unpaid or incorrect tax by the taxpayers to ZATCA within a 15-day period. Additional information can be found on this link. 

It is important for producers, holders and importers of excise products in Saudi Arabia to assess the impact of the above proposed amendments to their business, such as considering the impact on:

• Their supply chain arrangements;
• The option to expand their service lines to include other types of excise products;
• and Their compliance obligations to obtain additional tax warehouse licenses.
• Compliance with reporting obligations of underpaid tax.

Kuwait developments

Kuwait General Administration of Customs publishes amendments to customs instructions on goods of national origin imported into Kuwait from duty free zones and shops in the UAE

The General Administration of Customs in Kuwait published Customs Instructions No. (42) of 2022 on the amendment of Customs Instructions No. (126) of 2013. The amendment aims at overcoming the obstacles and lifting the barriers to the movement of intra-regional trade between the UAE and Kuwait.

As per the amendment, it has been decided that:

• The Dubai Industrial City shall not be considered as a free zone, and companies located in the Dubai Industrial City shall be considered as national companies and their products shall be treated as (UAE) products of national origin. This is based on the certificate of origin and the industrial license issued by the UAE.

To view these instructions, please use this link.

Egypt developments

Egypt and Qatar sign Memorandum of Understanding on financial policy coordination

Egypt and Qatar signed a Memorandum of Understanding on financial policy coordination in Doha on 22 June 2022, which intends to exchange expertise in the sphere of taxation, and customs procedures to promote cooperation and alignment in relation to financial visions and policies at the bilateral as well as international levels. 

Further, an extended meeting was held to discuss a commitment from Qatar of $5 billion investment partnerships in Egypt, in line with the “framework of boosting economic cooperation”.

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.