GCC Indirect Tax Digest
November 23, 2021
Less than two weeks 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 two weeks 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.
VAT Implementing Regulations amended in relation to e-Invoicing
The Board of ZATCA has approved amendments to several Articles of the KSA VAT Implementing Regulations. The amendments are for provisions impacted by the implementation of e-Invoicing and will take effect from 4 December 2021 (the go-live date for the first phase of e-Invoicing as mentioned above).
The amendments are in Article 53 on Tax Invoices, Article 54 on credit and debit notes, and Article 66 on recordkeeping requirements. An overview of the amendments is available in Arabic here. Deloitte will shortly be publishing a more detailed alert on the amendments.
Businesses in KSA should ensure that they familiarize themselves with the amended provisions ahead of the effective date and take the necessary action to be in compliance with the amended provisions by the effective date.
ZATCA announces violations and penalties in relation to e-Invoicing
The Zakat, Tax and Customs Authority (ZATCA) has provided further details surrounding the penalties that will apply with respect to taxpayers who are non-compliant with the e-Invoicing regulations and requirements that will commence on 4 December 2021 in the Kingdom of Saudi Arabia (KSA). The announcement is available here for your ease of reference.
For an overview of the applicable penalties, please refer to Deloitte’s recent alert.
While the KSA Value Added Tax (VAT) Law provides a penalty for failure to maintain books and records as per the VAT regulations and a general penalty of up to 50,000 SAR, the recent announcement specifically clarifies the penalties for violations in relation to e-Invoicing. However, it is still unclear whether the penalties as prescribed will apply on a “per invoice” basis or on a “per tax period” basis.
For any violations not referred to in the announcement, taxpayers would still need to refer to the general penalties that may apply under the KSA VAT Law.
Deloitte is able to help taxpayers address their e-invoicing needs through a comprehensive and compliant solution – Intesa. Please click here to watch a short video that highlights the solution and its capabilities. If you wish to discuss any aspect of e-Invoicing, please contact your usual Deloitte adviser.
Reconsideration request submission process amended
The United Arab Emirates (UAE) Federal Tax Authority (FTA) has announced that as of 19 November 2021, reconsideration requests are to be submitted via the FTA’s e-Services portal, rather than the form on the website that was previously used.
In addition, the FTA has published a reconsiderations user guide, which sets
out the steps required to be taken in the e-Services portal depending on whether or not the applicant is registered for VAT or Excise Tax as applicable.
Further, it appears that Reconsideration requests no longer need to be submitted in Arabic. Applicants may submit the requests in English, subject to agreeing to a disclaimer that if the applicant later wishes to file an objection to the Tax Disputes Resolution Committee (TDRC), they will be required to provide a legal translation of the application, supporting documents, FTA correspondence, and the FTA decision on the reconsideration request.
FTA publishes VAT Public Clarification on amendments to the Federal Tax Procedures (FTP) Law
The FTP Law aims to outline the mutual rights and obligations between the FTA and taxpayers with regards to Value Added Tax (VAT), Excise Tax, and any future taxes to be introduced in the UAE. The FTP Law was recently amended with changes that took effect from 1 November 2021.
TAXP003 provides the FTA’s summary of the changes, which relate to the mechanism and requirements for objections and appeals by taxpayers, alternative mechanisms for objections and appeals by government entities, and the mechanism of waiving, refunding, and payment of penalties as instalments (as summarized in Deloitte’s recent alert).
The Public Clarification further clarifies that where settlement of tax or penalties is required before a particular stage in the appeals process, then if the decision of the prior stage increased the tax/penalty amount, the amount to be settled before escalating the appeal is determined based on the increased rather than original amount.
For example, if a TDRC decision increases the tax due amount for a taxpayer from AED 100k to AED 110k (with the original AED 100k settled before appealing to the TDRC), then the additional AED 10k resulting from the TDRC decision must also be settled before escalating the appeal to the Court.
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.