GCC Indirect Tax Weekly Digest

Deloitte publishes 'The impact of Public Clarification No. VATP001 on the Banking industry'

The release of Public Clarification No. VATP001 on the Value Added Tax (VAT) treatment of compensation-type payments by the Federal Tax Authority (FTA) of the United Arab Emirates (UAE) has sparked a discussion within the banking industry on the impact of the guidance on similar penalty-type fees charged by banks.

Deloitte has prepared a thought piece on the applicability and impact of the Public Clarification to the banking industry, where payments resembling compensation payments are a common occurrence. The article can be downloaded here.

It should also be noted that, although this Public Clarification has an impact on the Banking Industry, as addressed in the article referred to, it is equally applicable to other industries that may be involved in applying similar penalty type fees.  

UAE FTA publishes new version of Excise Tax Returns user guide

The UAE FTA has published a new version of the Excise Tax Returns user guide, which was originally published in May.

Of particular interest, the new version of the guide states that the value of excise goods and Excise Tax will be automatically populated on the relevant declaration forms for submission, based on the FTA’s list of standard prices.

The updated guide also includes the conditions and requirements to be met in cases where a taxable person believes that Excise Tax should be calculated on a higher value.

As is normal in these situations, if you wish to address the value ascribed based on the FTA’s list of standard pricing, you need to ensure that the basis for your approach to the FTA is backed up by well-reasoned arguments.

UAE FTA issues Designated Zones guide and public clarification on VAT recovery of entertainment

The UAE FTA has published a new VAT guide on Designated Zones. The 18-page guide provides much awaited clarification on the treatment of supplies to, from and within the Designated Zones.

Simultaneously, a public clarification has been issued regarding the VAT recovery rules on business entertainment. It provides further clarity on the types of supplies made by businesses to employees and clients which are blocked from input tax recovery under Article 53 of the UAE VAT Regulations.

Both guides were published by the FTA this morning and we are currently drafting client alerts providing more detail which will be released shortly.

KSA GAZT issues VAT violations against hotels and furnished apartments

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) announced that its field inspection teams recently issued hundreds of VAT-related violations against hotels and furnished apartments in KSA.

The violations mostly consisted of VAT invoicing, compliance, and collection matters. The inspections come as part of GAZT’s drive to ensure that businesses comply with the KSA VAT legislation.

These inspections indicate that GAZT is taking an active approach towards conducting inspections of businesses.  As such it is imperative that businesses in this sector take active steps to address these types of problems, preferably before inspections occur and penalties are assessed.

As important, however, is the fact that if GAZT are looking at these types of issues on an economy sectoral basis, and if your business has not yet been approached,  you can assume that this will occur at some stage in the imminent future.

Please note that this digest is for information purposes only and should not be construed as an 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.