GCC Indirect Tax Weekly Digest

UAE FTA releases guidance on VAT import declarations

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has released new guidance on Value Added Tax (VAT) import declarations.

The VAT import declaration user guide is primarily intended to help taxable persons understand the process for declaring goods at Customs, completing VAT declaration forms, and providing the necessary information to Customs to validate the import declaration and VAT due.

It does, however also address circumstances where the importer is not a taxable person, but may need to make a payment of VAT in order to clear goods through Customs.

The guide includes sections on different scenarios businesses might face, such as importing taxable goods into the UAE mainland, importing and then exporting goods to another country, and importing goods into a VAT Designated Zone (DZ).

Of importance, it also addresses the practicalities of transferring goods from one DZ to another DZ subject to an e-Guarantee, which may also require the creation of an e-services account.

UAE FTA updates warehouse keeper Designated Zone guide with renewal requirement

The UAE FTA has released a new version of the warehouse keeper and Designated Zone user guide. The new version of the guide contains significant additions, with practical screen shot Appendices to assist with actioning the requirements dealt with.

The FTA has specified that Designated Zone registration must be renewed annually. If the registration is not renewed, it will expire and the Designated Zone status will be lost.

In order to renew the registration, the Amendment of the Designated Zone registration application, including the Valuation and Financial Security section must be completed. Further, a renewal fee of AED 2,000 must be paid, and the FTA may require an updated financial guarantee.

If the Designated Zone is not renewed by the due date, or the renewal payment is not made, the Designated Zone will become suspended and the Designated Zone number will be locked. If payment is not received within 20 days after the suspension, the Designated Zone will expire and the warehouse keeper will have to re-register a new Designated Zone.

As the consequences of non-renewal of the Designated Zone status are potentially significant, it is important for affected businesses to diarize the need to follow up and take the appropriate action. 

Given that the process is still fairly new, we would also suggest that, in seeking to renew registrations, businesses anticipate that there may be delays in the process, and therefore that they consider commencing the renewal process early.

KSA GAZT publishes English translation of VAT employee benefits guidelines

The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has published the English translation of the VAT employee benefits guidelines.

The guidelines, which were originally published in Arabic in March, provide clarity on a subject which is relevant to all businesses with employees on their payroll. Further, issues such as the distinction between carrying out an ‘economic activity’ vs. providing ‘personal services’ are addressed.

The guide includes sections on cash payments to employees (such as salaries/wages and reimbursements of expenses), discounted goods or services, and statutory benefits.

It is important that businesses are fully aware of which employee benefits input tax can, and cannot, be recovered on. Attempting to recover input tax where it is not allowed puts businesses at risk of penalties from GAZT.

Please note that while guides issued by tax authorities are helpful, they do not cover all potential scenarios and as such you may still need to seek further guidance or support.

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.