GCC Indirect Tax Weekly Digest

Bahrain developments

Q1 2019, first VAT returns due end of April

The Bahrain Q1 2019 Value Added Tax (VAT) return is due to be submitted by VAT-registered businesses to the National Bureau for Revenue (NBR) by 30 April 2019.

In 2019, businesses with annual supplies of greater than BHD 5 million will have a quarterly filing period.

Such businesses should immediately and proactively take steps to ensure that their VAT return data and records are complete and in compliance with the VAT legislation, so as to be in a position to file an accurate VAT return by the deadline.

Deloitte will be holding a VAT return training session for clients on April 11 to cover both the technical and procedural aspects of filing the return. This will include information that must be reported, records that must be kept, and useful reconciliation checks to perform before submission. For more information, please get in touch.

NBR publishes Financial Services VAT guide

The NBR has published the first edition of its Financial Services VAT guide.

The guide is relevant to businesses in the financial services industry making both taxable and exempt supplies, such as banks (retail, corporate, investment and all other types of banking), (re-)insurers, funds and fund managers. It is also relevant to any other business providing intercompany loans or engaging in similar activities for which it gets remunerated by way of interest or implicit margin.

The guide elaborates on the definition of a financial service under the Bahrain VAT legislation, providing many different examples. Details on the VAT treatment applicable are provided, which will depend on the nature of payment made for the service (i.e. by explicit fee or implicit margin/interest) to determine whether an exemption applies.

Further, the guide includes details on the often complex input tax apportionment process, whereby businesses making both taxable and exempt supplies must apportion their input tax to recover only the amount they are entitled to.

For a detailed overview of the new guide, please refer to Deloitte's separately sent alert.

NBR publishes Digital Economy VAT guide

The NBR has published the first edition of its Digital Economy VAT guide.

The guide provides clarity on the VAT treatment of e-commerce (online supplied) goods, electronic services, and supplies made through an agent or intermediary.

The VAT treatment of e-commerce and electronic services depends on a number of factors, including the residence and registration status of the supplier and customer, the place of supply, and whether composite supply rules apply.

UAE FTA publications

Digital Tax Stamp guidance documents

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published a number of guidance documents on its Digital Tax Stamp (DTS) page. The DTS scheme is intended to monitor Excise Tax compliance and prevent illicit trading of tobacco products. The new documents include:

• DTS overview – a diagram is provided showing the DTS process, separated between activities that take place outside and inside the UAE border.

• DTS milestones – further details are provided on the specifics of production, importation, and supplying/selling products for the period until 1 May 2019, between 1 May 2019 and 1 August 2019, and from 1 August 2019 onwards.

• Duty Free clarification – all Duty Free products must have DTS markers; products sold in Duty Free inbound and inland should have a red stamp while products sold in Duty Free outbound should have a green stamp.

DTS workaround vs. full aggregation – details are provided on the supply chain tracking methods to be used until 1 August (workaround solution), after which full aggregation is expected.

KSA developments

Imports and exports VAT guide updated

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has published the second edition of its Imports and Exports VAT guide.

Section 7 of the guide, which discusses exports, has been updated. Among the updates are details of the evidence required to indicate intent to export. GAZT expects a supplier to provide at least one of the following as evidence of intent to export:

• Export documentation showing the goods being exported by the supplier or in the name of the supplier;
• Transport documentation that shows the supplier as the transporter of the goods to a destination outside of the GCC territory; or
• Export documentation which shows the goods being exported by the customer or in the name of the customer, provided that this documentation either names the supplier of the goods or evidences the exact goods which were supplied by the supplier being exported.

Further details on documentation requirements have also been added to the section on indirect exports.

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.