GCC Indirect Tax Digest
December 22, 2021
31 December 2021 deadline to settle outstanding penalties to benefit from penalty reduction
The amended tax penalty regime in the United Arab Emirates (UAE) provides for relief for existing penalties which were imposed under the original rules, potentially allowing for businesses to benefit from a 70% reduction in penalties.
The deadline to settle the remaining payable amount is 31 December 2021. In order to benefit from the relief, the VAT-registered taxpayer would need to ensure that all tax due and 30% of the total unpaid administrative penalties are settled by 31 December 2021.
For more information about the amended penalty rules, please refer to Deloitte’s alert.
We recommend that businesses which may benefit from the relief for existing penalties should make any remaining necessary payments as soon as possible, to avoid the risk of payments not being received by the FTA by the deadline.
Amendments proposed to the RETT Implementing Regulations
The Real Estate Transaction Tax (RETT) was introduced in the Kingdom of Saudi Arabia (KSA) with effect from 4 October 2020 – below follows some important amendments to the Implementing Regulations which were published by the Zakat Tax and Customs Authority (ZATCA) on 15 December 2021. The official publication, released in Arabic, is available here for your reference.
For a summary of the key amendments, please refer to Deloitte’s alert.
The amendments to the Regulations rationalize and extend the scope of the RETT exemptions in certain cases, especially in relation to the transfer to charitable Waqf/licensed charity and on disposal of property pursuant to a legally certified Shariah compliant will without any cap.
However, the deletion of the residual category (Article 3, A 15) empowering the Finance Minister to apply his discretion as to the applicability of RETT means that the exemptions will not be more widely applied.
We are in constant communication with the ZATCA and will keep you appraised of further developments.
ZATCA issues E-invoice Generation Portal Simplified Guideline
The Zakat, Tax and Customs Authority (ZATCA) has recently issued the Electronic Invoice Generation Portal Simplified Guideline in Arabic.
The guideline highlights that ZATCA has developed an Electronic Invoicing Portal, which currently facilitates the individuals who generate a limited number of tax invoices (not more than 20 invoices annually). In addition, the guideline also provides details about:
- Purpose of the platform
- Registration mechanism
- Themechanism of generating Tax Invoices, Simplified Tax Invoices and associated notes
- View the generated invoices or notes
We understand that the portal is developed to provide relief for small/medium taxpayers who cannot purchase an electronic invoicing solution; therefore, the eligibility criteria indicate that this portal is only available to individuals who do not issue more than 20 invoices annually. The guideline also notes that small and medium enterprises should not use this portal if the number of invoices exceeds 20 annually.
Please note that those who fulfill the criteria will be notified from ZATCA to access and register on the portal before they can start issuing compliant electronic invoices.
Navigating the anticipated VAT rate increase in Bahrain
The Kingdom of Bahrain is planning to double the standard rate of Value Added Tax (VAT) from 5% to 10% with effect from 1 January 2022. For details about the
increase, please refer to Deloitte’s alert.
The proposed rate increase is part of the economic improvement plans following the impact of Covid-19 on the economy. The reforms are an important pillar in the government’s fiscal balance programme.
Businesses will need to consider the impact of the rate change on their operations, for example, businesses whose sales are partially or fully VAT exempt, will experience an increase in costs as a direct effect of the rate increase.
However, the rate increase will impact all industry sectors in Bahrain and not just the Financial Services, Insurance and Real Estate sectors.
Deloitte has therefore created a document that includes the various offerings available to businesses to help them effectively navigate this VAT rate increase, while maintaining full compliance with the VAT legislation in Bahrain. To access the document, please follow this link.
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.