GCC Indirect Tax Weekly Digest

UAE developments

FTA updates VAT Administrative Exceptions guide

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published an updated version of its VAT Administrative Exceptions user guide.

The FTA has amended the criteria for requesting a change in the length of the tax period for small and medium enterprises without government funding. Previously, the total value of taxable supplies in the preceding 12 months had to be AED 5 million or less, but in the updated version of the guide this has been changed to AED 9 million or less.

The remainder of the guide remains unchanged, which outlines the circumstances in which Administrative Exceptions may be approved by the FTA. Administrative Exceptions are the mechanism by which the FTA may provide registrants with concessions/exceptions allowed by the UAE VAT legislation, depending on the registrant’s circumstances and eligibility.

These potential exceptions are limited to:

• Tax invoices;
• Tax credit notes;
• Length of tax period;
• Stagger; and
• Extension of time for the export of goods.

Businesses that obtain Administrative Exceptions may be able to streamline VAT processes and increase efficiency, as well as decrease the risk of non-compliance.

KSA developments

GAZT approves amendments to VAT Implementing Regulations

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) Board of Directors has approved amendments to various articles of the Kingdom of Saudi Arabia (KSA) Value Added Tax (VAT) Implementing Regulations (by way of Decision no. (19-3-9) dated 30-10-1440H (03-07-2019). 

The amendments are effective from the date of publication (18 July 2019) and will be of particular interest to those taxpayers that “export” services from KSA to non-KSA recipients, and also with respect to non-resident taxpayers who have VAT compliance obligations in KSA.

In a move to support businesses to ease the administrative burden of VAT compliance, one of the provisions changed by the amendments removes the mandatory requirement for non-resident Taxable Persons to appoint a tax representative in the KSA. The amendments also confirm GAZT’s stated position (previously mentioned in Guidelines) that until the introduction of the Electronic Services System across the Member states, all other Member states should be considered as outside the Council Territory of the GCC.

These amendments to the Implementing Regulations appear to address some specific areas of practical concern faced by taxpayers, and we expect that the changes should in general be helpful to those affected taxpayers. In particular, the relaxation of the rules around the zero-rating of exported services will be a welcome clarification to those businesses supplying services overseas, as well as to those non-resident companies that have been required to pay VAT on such supplies. 

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.