GCC Indirect Tax Weekly Digest

KSA developments

Members of Boards of Directors not required to register for VAT

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has issued a press release stating that members of Boards of Directors are not considered taxable persons in their capacity as Directors, and the remuneration paid to them is not subject to Value Added Tax (VAT) in KSA, effective from 1 January 2018.

GAZT indicated that members of Boards of Directors are not considered completely independent of the companies they represent and are therefore not considered to be taxable persons when providing their services.  This will come as good news to a number of individuals who were caught by the below 1M SAR threshold for smaller enterprises and taxpayers to register earlier this year.

GAZT publishes Oil and Gas VAT guide (Arabic)

GAZT has published the first edition of its Oil and Gas VAT guide in Arabic.

The guide defines terms that are not defined for VAT purposes in the GCC VAT Agreement or KSA VAT legislation, such as ‘oil and gas’ and ‘pipeline distribution system.’

The guide also clarifies the rules applicable to supplies of oil and gas in various cases, including:

• the place of supply when supplying oil and gas with or without a pipeline distribution system;
• the VAT treatment of imports and exports of oil and gas, including when the supply takes place before or after import or export clearance; and
• special rules applicable to a supply of goods to or within Customs Duty Suspension.

Further, the guide includes sections addressing the VAT treatment of upstream, midstream, and downstream activities within each sector area.

Bahrain developments

NBR publishes booklet on VAT treatment of education

The Bahrain National Bureau for Revenue has published a booklet on the VAT treatment of educational services and related goods and services.

The booklet summarizes the conditions for the zero-rating of educational services, and provides examples of goods and services that are considered to be related to educational services (and therefore zero-rated) and those that are not considered related to educational services (and therefore standard rated for VAT purposes).

Further, the booklet addresses the VAT implications of a number of situations relevant to educational institutions, including:

• VAT recovery on costs incurred by an educational institution;
• third party consideration (i.e. where an employer pays the school fees on behalf of an employee);
• school donations and charitable fundraising;
• grants and sponsorships received by educational institutions;
• school transportation services; and online educational courses.

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.