GCC Indirect Tax Weekly Digest

FTA launches digital tax stamp system on tobacco products

The UAE Federal Tax Authority (FTA) has announced the launch of a digital tax stamp system on tobacco products. A digital stamp containing tax related data will be applied to the packaging of certain excisable goods to ensure Excise Tax has been paid and to facilitate the monitoring and inspection of the goods by the FTA.  This system is expected to go live in early 2019, initially for cigarettes and then for all tobacco products.   

If you have any questions in relation to Excise Tax, please contact Michael Towler or your usual Deloitte contact. 

GAZT Financial Services Sector Industry guidelines in English

The KSA General Authority of Zakat and Tax (GAZT) recently published the English translation of the Financial Services Sector Industry Guideline on its website. We have summarized some of the highlights of this guide below:

• Definitions: GAZT has provided definitions for terms not defined in the KSA law or regulations. These include definitions for security, debt security, equity security, explicit fee or commission and commercial discount.
• Partial deduction calculation: A debt security may be regarded as a Capital Asset, and therefore the transfer may be excluded from the default partial deduction calculation.
• Place of supply: Asset financing and insurance relating to real estate may fall under the special place of supply rules for real estate related services.
• Transfer of debts: the transfer of debt could be VAT exempt whilst the assignment of debt under a factoring arrangement may not be a supply for VAT purposes.
• Insurance brokerage: the guide provides insight into GAZT’s view on certain insurance arrangements, however this remains a complex area for VAT and careful consideration should be given to each transaction type.
• Zero rating: Zero rating may apply where a broker carries out a transaction on Tadawul (the KSA stock exchange) for a non-GCC resident.
• Funds: although a fund is not considered a legal entity under Saudi law, for VAT purposes it may be a Person capable of making and receiving supplies, and therefore may have its own VAT obligations.
• Supply from foreign establishment: where a foreign establishment contracts for services with the actual and immediate benefit being received by its KSA establishment,  the KSA establishment may be the deemed recipient of the services.

If you would like to discuss any aspect of the guide or the VAT implications of financial services generally, please contact Michael Camburn or Aamer Bhatti, or your usual Deloitte contact. 

This digest is for information purposes only and should not be construed as an 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.