GCC Indirect Tax Weekly Digest

UAE developments

Supreme Court decision on Voluntary Disclosure penalties

The Federal Supreme Court in the United Arab Emirates (UAE) has released a long-awaited decision regarding whether late payment penalties apply to Voluntary Disclosures submitted by taxpayers, in addition to the standard, statutory, voluntary disclosure penalties.

The Federal Supreme Court has taken a different view to that of the Tax Dispute Resolution Committee (TDRC), as well as the First and Second Instance Federal Courts, who all previously ruled in favor of the taxpayer. In essence, the Court has held that the Federal Tax Authority’s (FTA) policy of applying late payment penalties from the date of when the original tax return (with respect to which the Voluntary Disclosure of an error related) was due, is correct.      

For a summary of the basis of the Supreme Court’s decision and the impact on future voluntary disclosures as well as ongoing appeals, please refer to Deloitte’s alert.

This represents the first major decision of the UAE Supreme Court in relation to tax in the UAE. If you have submitted Voluntary Disclosures to the FTA, have any outstanding penalties with the tax authority or any live litigation regarding this issue, please contact one of our indirect tax experts listed below who would be happy to discuss the matter with you.

Deloitte Indirect Tax Consumer Business webinar on 3 November 2020

The last few months have seen significant economic and social disruption, and in particular the Consumer Business sector has been affected as supply chains and customer habits have been impacted. In addition, the UAE FTA has increased audits and scrutiny of business’ tax compliance.

Please join us for our upcoming Indirect Tax Consumer Business webinar which will take place on Tuesday, 3 November 2020 at 12:00 pm (UAE time).

In our upcoming webinar, our team of UAE Indirect Tax specialists will explore the following topics of particular concern to the Consumer Business sector:

• The VAT implications of staff accommodation arrangements;
• Recent legislative changes impacting the VAT treatment of the export of services;
• VAT Designated Zone rules and common supply chain issues;
• The VAT implications of promotions, discounts, and rebates;
• The tax disputes and appeals process; and 
• Customs Duty updates.

Please click here to register. We look forward to having you join us.

Oman developments

VAT Law analysis

Oman Royal Decree No. 121/2020, promulgating the VAT Law, was published in Arabic in the Official Gazette 1362 on 18 October 2020. The Law will go live on 16 April 2021, 180 days from the date of its publication in the Official Gazette.

The Law is divided into 13 Chapters and has 106 Articles. More details on exactly how some of the main decisions work will be in the Executive Regulations, which are to be released within the next two months. The standard rate of VAT will be 5% on go-live, with certain supplies being zero-rated or exempt from VAT.

The ambit of the tax is very wide under the Law. VAT applies on transactions in most goods and services. Note that the tax would also be applicable on importation of goods and services into Oman. Certain transactions – gifts, free samples, or private use of business assets – are treated as “deemed” supplies and fall within the purview of VAT.

For a detailed analysis of the VAT Law and suggested action to take, please refer to Deloitte’s alert.

The release of the Law is an important milestone for VAT in Oman. Many aspects of the Law will be clarified in the Executive Regulations and other guidance – start work and ask the questions that need to be raised now. The issuance of the Law itself requires businesses to prioritize their financial processes in order to be compliant.

KSA developments

GAZT publishes new VAT Circular on zero-rating of services

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has issued a VAT Circular in Arabic relating to the application of the zero rate to services supplied to recipients located outside KSA, according to Article 33 of the Implementing Regulations. 

The Circular broadly aligns with of the content included in the corresponding Taxpayer Guideline on Supplies of Services to Non-GCC Residents issued by GAZT in 2019, in a more summarized form.

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.