GCC Indirect Tax Weekly Digest
August 6, 2019
UAE FTA publications
VAT Public Clarifications on recovery of expenses and financial options
The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published new Value Added Tax (VAT) Public Clarifications on disbursements/reimbursements (VATP013) and on options/option premiums (VATP014).
Businesses should review their recharges of costs to understand whether they have been treated correctly as disbursements or reimbursements in accordance with VATP013. To the extent there is any under or over-declared VAT, corrections should be made.
For a detailed summary and analysis of the new VAT Public Clarifications, please refer to Deloitte’s separate alert.
Decision on DTS timeline for water pipe tobacco and electrically heated cigarettes
The FTA has published a Decision on the implementation of the Digital Tax Stamps (DTS) scheme for water pipe tobacco (commonly known as Shisha tobacco) and electrically heated cigarettes (Designated Excise Goods). The decision takes a similar approach to the previous Decision on the implementation of the DTS scheme for cigarette products, which came into effect fully from 1 August 2019.
FTA Decision No. 2 of 2019 on Implementing the Marking Tobacco and Tobacco Products Scheme sets out the timeline for implementation as follows:
- 1 November 2019 – Stamps will be available to order by importers or producers of Designated Excise Goods.
- 1 March 2020 – it will be prohibited to import Designated Excise Goods into the UAE if they do not bear Stamps.
- 1 June 2020 – it will be prohibited to supply, transfer, store, or possess unmarked Designated Excise Goods in the UAE.
The Decision, which takes effect on 1 November 2019, also sets out the fees for the purchase of Stamps and the requirements relating to the storage of Stamps.
We recommend that producers and importers of water pipe tobacco and electrically heated cigarettes make the necessary preparations for impacted products as soon as possible to avoid any delays in operations.
Updated version of guide on VAT refunds for business visitors
The FTA has published an updated version of its guide on VAT refunds for business visitors.
The list of eligible countries which have reciprocal agreements with the UAE (Appendix A) has been updated to include Switzerland.
The VAT refund scheme for business visitors allows foreign businesses to recover the VAT incurred on certain expenses in the UAE, subject to certain conditions and requirements.
Note that as per the guide, the claim period for submitting claims covering a calendar year will normally run for 6 months from 1 March of the subsequent calendar year. In respect of the 2018 calendar year however, the claim period will be 6 months from 2 April 2019. This means that any business wishing to submit a refund for the 2018 calendar year must do so before 1 October 2019.
Updated lists of VAT Designated Zones and charities that may recover input tax
The FTA has published updated versions of its list of VAT Designated Zones and list of approved charities that may recover input VAT.
The list of VAT Designated Zones has been updated to include:
- Al Hamra Industrial Zone – Free Zone
- Al Ghail Industrial Zone – Free Zone
- Al Hulaila Industrial Zone – Free Zone
The list of charities that may recover input tax has been expanded with a number of federal and Emirate-specific charities.
GAZT publishes English version of Tax Ruling Requests guide
The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has published the English version of its guide on Tax Ruling Requests.
The guide provides an overview of the process for applying for a Ruling (also known as an “interpretive decision”) from GAZT which is intended to clarify its interpretation of the KSA tax legislation under specific circumstances. This includes the Value Added Tax (VAT) and Income Tax legislation.
GAZT may issue private Rulings, where a response is provided to the applicant only, or public Rulings, where an anonymized version of the Ruling may be published and made available as guidance for others.
The Ruling request process can be complex, as there are significant information and documentation requirements.
Deloitte can assist your business with the preparation and submission of Ruling requests in KSA and we have so far helped many businesses in this area.
The Bahrain National Bureau for Revenue (NBR) has published an updated version of its VAT general guide.
Section 3.4, on tax group registration, has been updated to include additional details on the process for forming/joining a tax group. The guide also includes additional details on the conditions for persons to be considered “related” for the purposes of VAT grouping.
Oman MoF confirms no postponement of VAT rollout
On 31 July 2019, the Oman Ministry of Finance (MoF) released a public statement affirming there are no plans to defer the implementation of VAT.
In its statement, the MoF said "the government is working on completing the legislative procedures to issue the VAT law” and pointed out that the General Secretariat of Taxation is currently completing administrative and technical procedures in preparation for the application of this tax once approved.
Although a specific effective date of implementation has not been announced, the MoF has confirmed Oman’s VAT implementation is on track.
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.