GCC Indirect Tax Weekly Digest

FTA publishes guide on refund of VAT for building new residences by UAE nationals

The Federal Tax Authority (FTA) has published a guide on the process for requesting a refund of VAT by United Arab Emirate (UAE) nationals who have built a new residence.  The refund covers VAT incurred on eligible expenses relating to newly constructed buildings which are to be used solely as a residence of the applicant and / or the applicant’s family.  We have produced a summary of the refund process.

As the FTA has not yet published the list of verification bodies which will form part of the review process for such claims, applicants will not yet be able to submit refund claims to the FTA.  As such, valid tax invoices in the name of the applicant (not simplified invoices) and related documentation should be retained until such time as refunds can be submitted.

If you have any questions in relation to your eligibility for the refund, or VAT in the construction or real estate sector, please contact your usual Deloitte Indirect Tax contact.

UAE Central Bank notifies daily exchange rates

The Central Bank of the UAE has now begun to publish daily exchange rates on its website for certain currencies against the UAE Dirham to be used for VAT purposes.

The rates, which are updated Monday to Friday, are based on FX rates prevailing at 6pm UAE time each day. Where specific markets are closed due to a local holiday, then the rate used will be the prevailing rate of the previous day at 6pm.

Historical rates are also available on the Central Bank website.

Article 69 of Federal Decree-Law No. (8) of 2017 states that where a supply is in a currency other than AED, the amount stated on the tax invoice shall be converted to AED using an exchange rate approved by the Central Bank at the date of supply. As such all businesses should now take action to ensure that they comply with the Central Bank exchange rates with immediate effect. 

Kuwait VAT and Excise updates

The Kuwaiti Parliament Budget Committee confirmed in a meeting this week that the introduction of VAT will not take place until 2021.  The Kuwait Government stated its intention to progress with the introduction of excise tax on selected products such as tobacco, energy drinks and carbonated drinks.

A statement confirming the proposed plans (which is currently only available in Arabic), has been published on the website of the Kuwait National Assembly.

As the Kuwait Government has confirmed its commitment to both VAT and excise tax, businesses should continue to prepare for the introduction of these in Kuwait.  

If you have any questions on the introduction of VAT in Kuwait, please contact Robert Tsang. 

Please contact Michael Towler if you would like to discuss excise tax.  

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.