GCC Indirect Tax Weekly Digest

Bahrain MOF holds briefing on VAT

The Bahrain Ministry of Finance (MoF) held a briefing on Monday, 3 December 2018 with Bahraini businesses, VAT experts and business professionals.

The key message from the meeting was that VAT will definitely be implemented with effect from 1 January 2019 with a staggered implementation dependent on the level of turnover of the taxpayer. This appears a sensible and logical way in which to manage the large number of taxpayers that will need to be registered for VAT in Bahrain.

UAE FTA publishes Decision on marking tobacco products

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published a new Decision on the scheme for marking tobacco and tobacco products. The marking scheme is intended to allow the FTA to monitor the payment of excise tax on tobacco and tobacco products.

Federal Tax Authority Decision No. (3) of 2018 on Implementing the Marking Tobacco and Tobacco Products Scheme sets out the dates relevant to the scheme and the fees for the purchase of the marks, and will come into effect on 1 January 2019.

Notably, the Decision defines the ‘designated excise goods’ which the Decision is applicable to as ‘all types of cigarettes’. This is a more limited definition than the ‘tobacco and tobacco products’ which are subject to excise tax.

The following key points are included in the Decision:

• Marks will be available for importers and producers to order from 1 January 2019.
• From 1 May 2019, designated excise goods without marks will not be permitted to be imported into the UAE.
• From 1 August 2019, designated excise goods without marks will not be permitted to be supplied in the UAE.
• The fee for purchasing marks will be AED 0.084 per mark, to be paid by the importer or producer before the marks are issued to them.
• Article 3 of the Decision sets out the requirements for the storage and security of marks.

KSA GAZT publishes guide on business promotions

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has published the Arabic version of a new guideline on business promotions.

The new guideline is intended to provide additional clarity to taxpayers regarding the VAT implications of common promotional activities carried out by taxable persons. The published guidance applies equally to promotional activities in retail and in other types of trade with consumers – whether businesses or individuals.   

The guide covers topics including valuation of supplies, details regarding types of consideration (monetary and non-monetary), expenses and other taxes, and consideration paid by third parties. It also details how to apply the Fair Market Value to supplies and the related calculation.

The guide also expands upon topics addressed briefly in the VAT legislation, such as vouchers, and topics the legislation does not particularly address such as loyalty programs.

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.