GCC Indirect Tax Weekly Digest

Deloitte releases guide on outlook of Oman VAT implementation

Following the introduction of Value Added Tax (VAT) in the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) effective from 1 January 2018, the other four Gulf States are planning their implementation of VAT as agreed under the Gulf Cooperation Council (GCC) VAT Framework Treaty.

In Oman, we understand that the local VAT legislation, regulations and guidance are under preparation and review.

To assist businesses on introduction of VAT in Oman, Deloitte has created a guide which provides a general outlook about the implementation including the most impacted industries, application of the tax, the suggested pre-implementation actions, amongst others. The guide is available both in English and Arabic versions.

From our VAT implementation experience in the UAE, KSA and other countries, businesses need to start preparing early, to ensure readiness and day one compliance.

One of the key areas where problems were encountered was with legacy ERP systems.  They are very often on the critical path for a successful implementation project, and the decision whether to try and upgrade them or replace them is notoriously complex and time consuming.

UAE decides to apply a domestic reverse charge on wholesale precious metal and diamond trade

In response to representations received from the industry regarding the drop in gold demand, the Cabinet has taken a decision to relieve gold and diamond trading from VAT in UAE. However, the Cabinet Decision is yet to be made available.

As per the news article published in Arabian Business, VAT will be applicable only under the reverse charge mechanism. The amount of VAT at 5% will only be entered in the inputs / outputs section of the VAT return but without any actual payment of the VAT, intended to provide traders with  significant cash flow relief.

The relief is expected to be applicable on investments in precious metals such as gold, silver and platinum (99% pure), used in trade in accordance with internationally accepted standards with a purity of 99 percent or more. It is unlikely that any relief will be provided in respect of trade in dore bar (less than 99% pure) trade.

FTA approves implementation plan for Tourists Refund Scheme

The FTA’s Board of Directors has formally approved the implementation of the Tourists Refund Scheme in a recent meeting. The proposed scheme, which should enable tourists to recover VAT charged to them in UAE, is intended include outlets and points of sale across UAE within the refund system.

During the meeting, the FTA also reviewed the protective measures on tobacco products to be implemented to avoid Excise Tax evasion.

A set of executive decisions regarding the internal regulatory and administrative policies of FTA were also approved during the meeting.

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.