GCC Indirect Tax Weekly Digest


GCC Indirect Tax Digest

September 28, 2021

Oman developments

The OTA issues a VAT Guide for the Real Estate Sector in Arabic

The Oman Tax Authority (OTA) has recently issued its official Value Added Tax (VAT) Guide on Real Estate in Arabic. The guide provides guidance on the application of VAT to Real Estate transactions in Oman, including sale and renting of residential and commercial properties, services related to Real Estate, etc. The guide also provides clarification on the applicability of VAT on developed vs. undeveloped land, VAT on supplies related to residential and
commercial property, VAT implication on Real Estate transactions in Special Zones, guiding examples for transactions staggering over the VAT implementation date, etc.

Bahrain Developments

Early reports from Bahrain that the VAT rate may be doubled from 5% to 10%

We understand that Bahrain plans to double the standard rate of VAT from 5% to 10% with effect from 1st January 2022.  The National Bureau for Revenue of Bahrain (“NBR”) is yet to make an official announcement, but we understand the proposed rate increase is part of economic improvement plans following the impact of Covid-19 on the economy and Fiscal Balance Programme. 

We expect additional details on the rate increase, including any guidance on transitional rules to be released by the Authorities in the near future; and in the meantime, we recommend taxpayers start to measure the potential impact of the increased VAT rate on their cash flow, contracts, operations, IT and supply chain. 

Kuwait developments

Services by Kuwait Customs Go Digital

The General Administration of Customs (GAC) has announced the launch of the first phase of the tracking service for express mail consignments, as part of its efforts towards digital transformation initiatives, which is considered the work charter and road map for the future plans of the GCC customs authorities.

The GAC continues to update its plans from time to time to include comprehensive technological solutions to radically change the way customs compliance operates. Many technical services and automated linking channels were launched as a basis to achieve an integrated digital framework, so that processing operations would be fully electronic through the customs system platform. 

In line with the government’s plan to convert areas along Jaber Bridge into investment facilities, the Ministry of Commerce and Industry has agreed to add a number of commercial activities, such as floating restaurants. The decision necessitates the issuance of new commercial licenses for the mentioned restaurants, provided that the process of issuing licenses is subject to the approval of the Ministry of Interior (Coast Guard) and the Ministry of Finance.

KSA developments

Less than 70 days to e-invoicing implementation

The go-live date for the first phase is 4 December 2021, and the go-live date for the second phase is 1 January 2023. The latter will be implemented in a phased roll-out, and ZATCA will inform the targeted/selected taxpayers six months before integrating with the Authority’s system.

The first phase of electronic invoicing (e-invoicing) is expected to be implemented in the Kingdom of Saudi Arabia (KSA) by the end of this year.

As previously announced, there will be two major phases: (1) the Generation phase and (2) the Integration phase.

Businesses in KSA should take action as a matter of priority to ensure that they are in compliance with the e-invoicing requirements by the applicable deadlines. There are now less than 70 days remaining until the go-live date for the first phase, and as such, businesses should ensure that they are in a compliant position by the deadline to avoid penalties for non-compliance.

Tax and customs committees merge into one secretariat

The Board of Directors of the Zakat, Tax, and Customs Authority (“ZATCA”) issued Decision No. (17-01-21) dated (05/02/1443 AH) 12/09/2021, thereby merging the secretariats of tax and customs committees into one secretariat, under the name of the General Secretariat of Zakat, Tax and Customs Committees (“GSTC”). As an independent entity, the GSTC’s task will
be to provide legal, technical, accounting and administrative support to the
zakat, tax and customs committees in conducting their business.

The decision of the ZATCA Board of Directors is an extension of the series of actions taken to organize and facilitate the litigation journey, as well as to raise the level of integration and efficiency as part of the continuous endeavors to facilitate the customer journey.  Such measurements also aim to standardize the organizational, administrative and technical procedures to avail of the common services; achieve the highest levels of quality in enabling the efficient settlement of Zakat, tax and customs disputes; and provide access to innovative and effective methods in facilitating the litigation journey for customers, while enhancing operational efficiency at the institutional level. 

All transactions can be carried out via the GSTC electronic portal through digital integration with all relevant systems. The purpose of the process is to contribute to the enforcement of zakat, tax and customs laws and automate all judicial procedures through the series of steps aimed at improving the customers’ experience. This process provides a time efficient and effort saving service, from registration of the case/lawsuit to issuance of the relevant decision and access to a copy of such decision via the electronic services, as well as the provision of a remote litigation service for the purpose of investing time and completing the related transactions. 

Furthermore, the GSTC encourages related parties to access the awareness materials which are available on the Secretariat’s website or accounts on social media platforms such as Twitter (@_GSTC) and LinkedIn (GSTC), or by contacting the GSTC through the unified call center number (8001220000). 

ZATCA announces the possibility of depositing goods under customs duty, tax and restriction suspension arrangement in the "customs deposit zones"

The Zakat, Tax, and Customs Authority (“ZATCA’) announced that operating companies, importers and exporters can deposit goods under customs duty, tax and restriction suspension arrangement in “deposit zones”. This process contributes to better facilitation of the import and export process and the improvement of the trade flow in KSA on a larger scale.

The deposit zone is a place supervised by the competent customs department and managed by the company operating the deposit zone in which the goods are deposited under customs duty, tax and restriction suspension arrangement for several different importers and exporters within the region.

The current zones operating under this system are:

  • LogiPoint (Jeddah)
  • Eastern Gateway (Dammam)
  • Saudi Development and Re-Export Services Company (Dammam)

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.

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