GCC Indirect Tax Weekly Digest

KSA GAZT issues violations to entertainment businesses

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) published a press release stating that it has issued nearly 200 violations to entertainment businesses for non-compliance with the VAT legislation.

GAZT’s teams inspected over 1000 sites, and issued the violations for offenses such as non-registration for tax purposes and not issuing valid tax invoices. This indicates that GAZT is taking a proactive approach monitoring VAT compliance in KSA.

Approval of GAZT’s Internal Dispute Settlement Committee

The Ministry of Finance (MoF) has approved the appointment of the Internal Dispute Settlement Committee (“the Committee”) following a 3 month pilot. The Committee shall act as GAZT’s final internal dispute resolution level before cases could be referred to other external judicial bodies. The objective of the Committee is to manage taxpayers disputes efficiently, in addition to closing off any old tax cases that may have been pending for years.

In order to take the case up with the Committee, the taxpayer is required to fill out a manual form and email the Committee along with settlement amount. We understand that there is a plan internally that this application is to be made available via the ERAD portal, although it is unknown at this point when this will happen.

Currently, we understand that the Committee is unofficially prioritizing cases with the threshold settlement value of SR 10M, although we are not able to confirm that this is the case. Anything lower than this threshold value might be subject to delays.

The Committee has a deadline of 60 days in order to reach a decision once it accepts a case. The decision of the Committee is binding and cannot be objected by the internal lower level committees. In case the taxpayer is not satisfied with the Committee’s decision, it has the recourse to apply to the appeal committee.

As part of the usual process flow of objecting/appealing on a decision made by the GAZT, the taxpayers may instead seek recourse via the Committee in order to speed up the process, instead of going through the appeal committee.

The Committee may occasionally invite a taxpayer to bring their case in, the taxpayer has the choice to either accept or reject their invitation.

Like all communications with GAZT, the Committee expects all documents to be in Arabic as much as possible. The Committee would accept English correspondence, pursuant to the Taxpayer Charter, but their response time is likely to be slower.

Dubai Customs publishes Customs Notice No. 1/2018 on the submission of customs declarations and required documents

Dubai Customs has published Customs Notice No. 1/2018 – Submittal of Customs Declarations and Required Documents. This is the first Customs Notice issued since VAT was implemented in the United Arab Emirates (UAE).

The document sets out the rules that Dubai Customs has implemented in order to make the processing and clearance of declarations more efficient and comes into effect from 1 September 2018, superseding Customs Notice 7/2010, and Customs Notice 15/2011.

Deloitte point of view: Getting ready for VAT in Oman, Qatar, Bahrain and Kuwait - is it too early to start?

VAT has definitively arrived in KSA and the UAE. Businesses have prepared and implemented and now many that operate across the GCC are asking the question - should we be getting ready in earnest for VAT in the so-called ‘Next 4’ VAT states - Bahrain, Kuwait, Oman and Qatar? Is it too early to start?

In the world of VAT, proper preparation is everything, so arguably it can never be too early to start. That is easy to say but may be difficult to do. How do you start when there is no clear timeline, nor draft rules and no published laws? What we do know, however, is that VAT is not new, and that VAT rules, processes and procedures (invoicing, time and place of supply rules, compliance and returns as examples) are very similar from the European Union to Canada, from Japan to Mexico via Australia.

What we also know is that the various Laws that will apply in the ‘Next 4’ will be generally compliant with The Unified VAT Agreement for The Cooperation Council for the Arab States of the Gulf – commonly referred to as the GCC VAT Agreement.

Many aspects of getting ready - many points of planning and features of VAT implementation can be dealt with effectively now. To apply VAT correctly largely depends on whether an organization is fully versed in the practicalities of applying VAT, and dealing with change management in business processes.

This being the case, any prudent business should, as an absolute minimum, manage their own internal risk by undertaking an assessment of the impact of the  introduction of VAT on those businesses so that they can plan for implementation action that will need to occur when it is clear that this will be unavoidable.

The bonus to get it right from day one of a new VAT world is on businesses. Forewarned and prepared is forearmed, in VAT as in life.