GCC Indirect Tax Weekly Digest

KSA developments

GAZT issues new VAT guidance

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has published an updated versions of its Value Added Tax (VAT) guides in light of the increase in the VAT rate from 5% to 15% which came into effect on 1 July 2020.

Each guide has been updated with a page detailing the increase in the VAT rate. The guides state that where there are references to a VAT rate of 5%, whether in guidance or monetary calculations, this should be interpreted as 15% where applied to supplies or imports made on or after 1 July 2020 and in accordance with the transitional rules.

In addition, as a result of the recent legislative changes, GAZT has published a new guide in Arabic on the VAT treatment of individuals’ Real Estate transactions. The guide includes:

• An overview of VAT on individuals’ Real Estate transactions;
• Products subject to VAT;
• Real Estate supplies subject to VAT;
• Exceptions; and
• Interactive and useful links to: Real Estate registration, verification of the registration application, and cancelling an application.

Oman developments

VAT and Excise - Selective Tax on the march

To our knowledge, the Majlis Al Shura continues to work on the Implementation of VAT in Oman. The VAT Law review is now complete and being “fast tracked” through the legislative process. This process is subject to recommendation that the implementation take place when the Oman economy “reaches a growth level of 3%” and provisions are made to cushion the effects for those with “income levels below 900 Omani Rial (OMR)” a month and the VAT Law is remitted to the State Council. The Council will have 15 days to review the Law before it is shared with the Sultan. The review of conclusions and recommendations have continued on from last week’s session held by the Shura which included representations from the Oman Tax Authority (OTA), the Ministry of Commerce and Industry and the Public Authority for Consumer Protection.

Whilst every effort is being made to give businesses at least six months to prepare for the implementation, it is possible that VAT could be introduced in the Sultanate in early 2021. If your business or supply chain may be impacted by the impending VAT implementation, now is the time to start preparing to ensure day one compliance.

The Executive Regulations on Excise/Selective Tax Law have been Gazetted and released via Ministerial Decision no. 51/2020. The regulations highlight the rules applying to the levy, collection and administration of the tax, tax warehousing, assessments and inspections by the OTA amongst other points. Please keep in mind the reversion rate on alcohol products is now 100% effective 1 July 2020, and the expansion in scope on sugary/sweetened beverages will apply 1 October 2020. For more details, please refer to our most recent tax alert, available on this link.

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.