GCC Indirect Tax Weekly Digest

UAE developments

FTA announces compliance statistics and new VAT refund procedures

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published a press release announcing statistics related to Value Added Tax (VAT) compliance in the UAE. The FTA also announced updated VAT refund procedures for UAE nationals building a new residence and for overseas tourists claiming refunds on VAT incurred in the UAE.

The FTA announced that tax compliance has increased significantly, with 311,400 taxable persons registered with the FTA. There are 754 businesses registered for Excise Tax and 305 authorized tax agents.

Refund procedures for UAE nationals building a new residence have been streamlined and expedited, while tourists who incur VAT on eligible purchases in the UAE may recover the VAT up to a year after their departure if they validated their tags but could not collect the cash immediately upon exiting the UAE.

In addition, the FTA announced that its Board of Directors reviewed the procedures of the Digital Tax Stamp scheme for cigarettes and the upcoming expansion of Excise Tax on 1 December 2019.

These announcements indicate that the FTA is taking a proactive and pragmatic approach to many of the processes and procedures related to taxation in the UAE and is seeking to increase efficiencies within refund processes.

Further, the FTA Board of Directors’ active engagement with the procedures related to the operation of the Digital Tax Stamps scheme and the expansion of Excise Tax indicate that the FTA is determined to ensure that businesses achieve and maintain compliance with the relevant legislation.

These developments indicate that, approximately two years after the implementation of VAT and Excise Tax in the UAE, the FTA is seeking to modify processes and procedures to achieve a state of maturity whereby compliant taxpayers can more easily navigate processes, and non-compliance can more efficiently be identified and dealt with.

As the VAT and Excise tax regimes mature, the FTA will undoubtedly expect businesses to review their own internal processes related to tax management in order to develop an advanced state of compliance. Many businesses are therefore considering the need for a VAT audit readiness review in order to assess their current processes and determine whether further governance is required to ensure a robust compliance process. Increasingly, tax technology is a core consideration in how businesses should manage tax in the most effective and efficient manner.

KSA developments

GAZT holds wide-ranging conference on taxation

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) held a wide-ranging and comprehensive conference in Riyadh on 13 and 14 November 2019, including many eminent speakers from the international world of taxation.

In addition to this, there were a number of facilitated break-out sessions covering discrete areas of the various taxes that are in play within the KSA.

The overarching theme of the event was clearly that KSA is undergoing a vast amount of change in how taxation is applied across the various sectors of economy.

Noteworthy as well is the fact that it will shortly be KSA’s turn to take over the Chairmanship of the G20; with changes being talked about in the realm of digital taxes and elsewhere, it is sure to be an interesting six months (and more) ahead.

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.