GCC Indirect Tax Weekly Digest

UAE developments

FTA publishes VAT Public Clarification on timeframe for recovering input tax

 The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published a new Value Added Tax (VAT) Public Clarification on the timeframe for recovering input tax.

VATP017 clarifies that input tax must be recovered in the first tax period in which both of the two following conditions are satisfied:

1. The tax invoice is received; and
2. The business has the intention to make payment of the
   consideration for the supply before the expiration of six months after the
   agreed date of payment is formed.

As such, where a tax invoice is received in one tax period and the intention to make the payment is formed in a later tax period, the input tax can only be recovered in such later tax period (i.e. in the later tax period when the intention to make the payment is formed).

 The Public Clarification also states that if input tax is not recovered in the first two tax periods when the two conditions are satisfied, a taxable person is required to submit a Voluntary Disclosure to amend the input tax reported in the VAT return of one of the two tax periods.

However, the Public Clarification does not mention any value thresholds for when the Voluntary Disclosure is to be submitted, which suggests any value of input tax not recovered within this timeframe should be adjusted by way of a Voluntary Disclosure.

 Businesses should therefore consider reviewing their current processes relating to receipt and approval of purchase invoices and the timing of input tax recovery to determine whether processes should be adapted or improved in view of the Public Clarification.

KSA developments

Tax appeals courts begin operations

 Following Royal Order No. 26040 (the Order) dated 21/4/1441 AH corresponding to December 18, 2019, the tax appeal courts have finally reopened for business in the Kingdom of Saudi Arabia (KSA) over the last couple of weeks with a number of taxpayers now having their appeals heard and progressed. 

Along with the Order, there have been a number of procedural and timing changes which need careful consideration and understanding in order to preserve taxpayers’ rights before the courts and the General Authority of Zakat and Tax (GAZT).

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.