GCC Indirect Tax Weekly Digest

FTA online tutorials for VAT return filing

The UAE Federal Tax Authority (FTA) has released eight online tutorials providing step by step guidance on the filing process for VAT returns.  These provide details of what is required in each box of the return, as well as the submission and payment process.

The tutorials can be accessed through the following links:

• Getting Started  
• Box 1
• Box 2 to 5
• Box 6 to 8
• Box 9
• Box 10 to 14
• Submission of Return
• Payment of Tax

Multiple users now possible on FTA e-services portal

The FTA has enhanced the functionality of its e-services portal to allow more than one person to manage or view the same Taxable Person’s account.  Multiple logins for an account can now be provided with ‘read only’ access, with a single user at any one time permitted ‘write’ access to edit the account and act on the Taxable Person’s behalf.

The procedure for adding and removing users, and managing access has been updated in section 3 of the registration user guide.

GAZT issues press release on snap inspections

The KSA General Authority of Zakat and Tax (GAZT) has issued a press release sharing information on its field inspections following the implementation of VAT.

GAZT has advised that a total of 5,212 violations were issued to businesses since VAT came into effect on 1 January 2018. The majority of violations were in response to the issuance of non-compliant tax invoices, collection of VAT at a rate exceeding 5% and failing to register for VAT. 

GAZT is ramping up its efforts to detect non-compliant businesses in anticipation of increased sales during the period of Ramadan.

Please contact Deloitte’s KSA VAT Partner, Michael Camburn, if you would like to discuss KSA VAT compliance or advisory matters. 

FTA publishes technical guide on tax groups

The Federal Tax Authority (FTA) has published a guide on tax groups. The new guide deals with the technical aspects of tax grouping in the UAE, and is distinct from the previously published tax groups user guide, which deals with the administrative aspects of establishing a tax group.

The new guide is intended to provide detailed guidance to taxable persons in the UAE on tax grouping, including the VAT implications of entering into a tax groups. The main topics discussed are the eligibility of taxable persons to form a tax group, including the business criteria, legal person criteria, establishment criteria, and related parties and control criteria.

Further, the guide discusses how to amend or disband a tax group, and circumstances under which the FTA may reject an application for grouping, forcibly disband a tax group, or force related parties into a tax group for anti-avoidance purposes.

Listed below are some of the reasons the FTA would refuse an application to form or add members to a tax group (or forcibly disband a tax group):

• the applicants do not meet the criteria to be grouped; or
• the FTA considers there is a serious risk of tax evasion; or
• there is a significant reduction in the overall tax due to the FTA will arise as a result of the change; or
• there is a significant increase to the administrative burden on the FTA will arise as a result of the change.

The guide goes onto state that generally it is the policy of the FTA to allow tax grouping, but refusal will typically occur where:

• there are insufficient transactions between the proposed tax group members, i.e. the proposed tax group members are not meaningfully interacting with each other;
• the proposed tax group will be difficult for the FTA to audit because its structure results in no internal commonality of audit;
• the only benefit to the proposed tax group will be a cash offset benefit; and
• the proposed tax group would place an additional administrative burden on the FTA, including but not limited to the reasons outlined above.

The guide should be referred to by not just taxable persons considering forming a tax group, but also those currently in a tax group in order to make sure they are aware of their ongoing responsibilities.

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.