GCC Indirect Tax Weekly Digest

KSA GAZT publications

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has published Value Added Tax (VAT) guides in Arabic on Islamic Finance and business transfers.

Islamic Finance VAT guide (Arabic)

This guide provides further clarity on the VAT treatment of Islamic Finance products and the transactions such products entail. Sections are included for a number of Islamic Finance products, including (but not limited to) Ijara, Murabaha, and Musharaka, with a description of the product and the relevant VAT treatment identified.

One of the key concepts of Islamic Finance is the transfer of ownership of goods from one party to another without the intention of permanently passing on the ownership of the goods to the recipient. The guide explains the special treatment of such temporary transfer of ownership when it occurs as part of the structure of an Islamic Finance product, in addition to providing details on the evidentiary requirements for proving the eligibility of applying the special treatment.

Business transfers VAT guide (Arabic)

This guide provides further clarity to taxpayers regarding what qualifies as an out-of-scope transfer of an economic activity that meets the conditions listed in Article 17 of the KSA VAT Implementing Regulations.

The guide details the distinction between a transfer of business via shares as opposed the transfer of business via assets and their respective treatments for VAT purposes.

Additionally, the guide provides information to taxpayers regarding the effects of a transfer of business in terms of VAT rights and obligations, as well as addressing special cases – namely, the transfer of a business within a VAT group and the transfer of real estate.

UAE FTA publications

Cabinet Decision and guide on Expo 2020 VAT refunds

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published a Cabinet Decision (Cabinet Decision No. 1 of 2019) which sets out that official participants in Expo 2020 may claim a refund of the VAT paid on the import or supply of goods and services relating to their participation in Expo 2020, subject to certain conditions.

Official participants are defined as countries and intergovernmental organisations which have received and accepted the official invitation from the State to participate in Expo 2020 Dubai in a non-commercial capacity as an exhibitor.

In order to obtain a refund, a claim must be submitted to the Bureau Expo 2020. The Bureau Expo 2020 will audit the refund claim and, if approved, will make a request to the FTA to refund the amount. The FTA or Bureau Expo 2020 may conduct inspections or request further information as part of the application process.

In addition to the Cabinet Decision, the FTA has also published a user guide for official participants on the refund application process.

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.