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GCC Indirect Tax Weekly Digest
November 5, 2018
KSA GAZT publishes second version of its transportation guidelines
The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has published the second version of its transportation sector industry guideline. The guide seeks to provide clarity on Value Added Tax (VAT) matters for businesses involved in passenger and freight transportation.
The updated guide provides further information on the application of the zero rate of VAT on the import and supply of a ‘qualifying means of transport’ and specific associated services and consumables.
An importer or customer of a means of transport must determine whether at least 75% of the means of transport are to be used for international transport. Section 7 describes the process of calculating the percentage used for international transport.
Where this test is met, the importer or customer may self-certify that the means of transport’s main purpose is predominantly for international transportation, and is not intended to be used for recreational or private use.
UAE FTA to introduce biannual tax periods for certain businesses
The United Arab Emirates (UAE) Federal Tax Authority (FTA) mentioned in a recent press release that a new biannual tax period will be introduced for some small businesses, commercial real estate owners, and board members from next November. Impacted businesses will be informed of their new tax periods.
Further, the FTA indicated that it is considering the development of an electronic link system to facilitate the payment of taxes related to the real estate sector.
These developments indicate that the FTA is actively taking steps to streamline the VAT compliance process and increase efficiency. It is likely that as the VAT regime in the UAE matures, the FTA will expect higher levels of compliance from businesses.
UAE FTA reports strong Excise Tax return compliance
The United Arab Emirates (UAE) Federal Tax Authority (FTA) announced that it has observed compliance with Excise Tax return requirements by 97.7% of registered businesses.
Excise Tax was implemented in the UAE on 1 October 2017, with a tax of 50% applied to soft drinks, and a tax of 100% applied to tobacco products and energy drinks.
A Reminder for KSA Small to Medium Enterprises (SMEs)
It should be remembered that SMEs operating in KSA that make total taxable supplies of between 375,000 SAR and 1,000,000 SAR in a twelve month period, and that were not previously required to be registered in accordance with Article 79(9) of the KSA VAT Implementing Regulations, now have less than 2 months to 1 January 2019 to ensure that they are registered for VAT purposes and able to comply with the VAT Law in KSA.
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.