GCC Indirect Tax Weekly Digest

UAE developments 

FTA publishes Excise Tax Public Clarification on deregistration of stockpilers 

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published an Excise Tax Public Clarification on the deregistration of stockpilers. 

EXTP004 clarifies situations where stockpilers may be allowed to deregister for Excise Tax where less than six months have passed since their effective date of registration for Excise Tax. 

In order for a registered stockpiler to be eligible to deregister less than six months following the effective date of Excise Tax registration, the following conditions must be met:

• All Excise Tax obligations of the registered stockpiler must have been met, including filing of declarations, submission of tax returns, and payment of all due tax; and
• The registered person must not conduct or intend to conduct any of the following activities in the future:
  • Production of excise goods in the UAE, where such production is in the course of doing business;
  • Importation of excise goods; or
  • Release of excise goods from a Designated Zone. 

As part of the deregistration application, the FTA may request the following documentation to verify that all outstanding Excise Tax obligations have been met: ·

• Copy of audited records showing the following:
  • Quantity of stock of excise goods on the date the liability to account for Excise Tax on those goods arose; and
  • Quantity of stock and sales of excise goods for the 12 months prior to the above-mentioned date.
• Copy of calculations prepared to determine whether excess excise goods were held on the date the liability to account for Excise Tax on those goods arose; and
• Evidence to demonstrate that Excise Tax has been paid on the excess excise goods. 

The FTA may request information and documentation beyond the above on a case-by-case basis. 

The rules relating to stockpiling excise goods are complex. Deloitte has a dedicated team of Excise Tax specialists who can help you achieve compliance with the UAE Excise Tax legislation. 

This includes assistance with product classification, advice on optimal supply chain structuring, registration and de-registration support, assistance with submitting clarification requests to the FTA, assistance with Designated Zone registration, and Excise Tax advisory/training. 

For more information about Excise Tax in the UAE and how Deloitte can assist your business, please contact Mark Junkin, Adrienne D’Rose, Yeji Moon Monda, or your usual Deloitte contact. 

FTA publishes an Business Bulletin summarizing the VAT treatment of supplies in the Education sector 

The UAE FTA has published a Business Bulletin providing a high level overview of the Value Added Tax (VAT) treatment of supplies in the education sector. 

The Business Bulletin, which is focused specifically on school and nursery entities, is intended to help educational institutions to understand the basic principles of VAT as they apply to the sector e.g. when to charge VAT on supplies, when the supplies are subject to the zero-rate, when tax invoices should be issued etc. 

The Business Bulletin summarizes the main provisions of the VAT law as they apply to the education sector in the context of school and nursery providers, and should therefore be helpful to small organizations or those new to the industry to quickly familiarize themselves with the basic VAT principles. The FTA has stated in the accompanying press release that the Business Bulletin is part of the FTA’s campaign for 2020, as it seeks to continue raising awareness about taxes and providing taxpayers with periodic and detailed tax information. 

The Press Release states this is the first edition of the Business Bulletin, indicating that similar documents may be published in future.  
 

Bahrain and Saudi Arabia developments 

Signed AEO mutual recognition agreement between Saudi and Bahrain Customs 

The Kingdom of Bahrain (Bahrain) Customs Authority (Bahrain Customs) and the Kingdom of Saudi Arabia (KSA) Customs Authority (Saudi Customs) have announced that the cooperation agreement on the mutual recognition of Authorized Economic Operators (AEO) has been signed by both the President of Bahrain Customs and the Saudi Customs Governor. Bahrain Cabinet and Ministry of Interior has also approved and signed the cooperation agreement. The agreement is aimed at increasing trade between the two countries, as it promotes the exchange of concessions provided to Economic Operators in relation to trading and movement goods in Bahrain and Saudi Arabia. 

This mutual recognition agreement aligns with both Bahrain and Saudi Customs’ aspirations to facilitate trade in the region and encourage businesses to attain the AEO status ensuring enhanced levels of security and process controls in relation to movement of goods.   

The AEO regime in its essence is a partnership between the customs authorities and businesses to promote transparency and enhance security in global supply chains. Having an AEO status suggests that as an organization involved in international movement of goods it has been certified by the relevant national Customs administration which is in compliance with WCO or equivalent supply chain security standards adopted by that jurisdiction. 

Businesses should therefore consider reviewing their current customs and global trade risk footprint to assess if obtaining the AEO status (either in Bahrain or KSA, as applicable) can help optimize their operational and business risks arising from movement of goods in the region and globally. Across the GCC, there is focus on enhancing supply chain security. Other customs authorities are also considering introduction of similar regimes. For instance, Dubai Customs also has a AEO regime that was introduced in 2016. 

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.