GCC Indirect Tax Digest

KSA developments

ZATCA publishes the English version of the VAT guideline on e-commerce

ZATCA has published the English version of its Value Added Tax (VAT) guideline on electronic commerce (e-commerce). The guideline was previously published in Arabic.

The guideline is intended to provide clarity to businesses involved with e-commerce in Saudi Arabia on the VAT rules applicable to their transactions. This includes determining the VAT treatment, place of supply, and responsibility to account for VAT on e-commerce sales made to customers in Saudi Arabia.

Businesses involved with e-commerce in Saudi Arabia should familiarize themselves with the guideline and determine if they are correctly accounting for VAT on their transactions. 

ZATCA launches an interactive glossary of terms and concepts related to its business

The Zakat, Tax and Customs Authority (“ZATCA”) has launched the zakat, tax and customs glossary of terms and concepts, which is the first interactive dictionary launched in a single file at the local and regional levels.

The glossary gives taxpayers and individuals clarity of the terms expressed by ZATCA, which essentially provide taxpayers and individuals with a better understanding of each term and condition.

ZATCA has also noted that the glossary was developed in accordance with the terms and expressions set forth in laws and regulations related to ZATCA’s business in such a way that it becomes the reference baseline in procedural expressions and concepts.

The glossary aims to be a reference base for Zakat, Tax and Customs terms and is provided out of ZATCA’s responsibility towards building an integrated culture in the fields of Zakat, Tax and Customs.

It is worth mentioning that the zakat, tax and customs glossary includes links to facilitate the browsing process by clicking on the specified icon to directly access the term and learn its meaning. The glossary was also classified according to the Arabic alphabet, and includes all terms and definitions related to the fields of Zakat, Tax and Customs in both Arabic and English.

ZATCA called upon all interested parties, specialists, and taxpayers from the business sector, as well as students and academics to review the interactive glossary that has been prepared for the purposes of awareness and education. In this regard, ZATCA highlighted that the glossary should not be construed as legal reference or advice, as reference shall be made to the text of the laws contained in the applicable regulations in this regard.

Less than 60 days to e-invoicing implementation

The go-live date for the first phase is 4 December 2021, and the go-live date for the second phase is 1 January 2023. The latter will be implemented in a phased roll-out, and ZATCA will inform the targeted/selected taxpayers six months before integrating with the Authority’s system.

The first phase of electronic invoicing (e-invoicing) is expected to be implemented in the Kingdom of Saudi Arabia (KSA) by the end of this year.

As previously announced, there will be two major phases: (1) the Generation phase and (2) the Integration phase.

Businesses in KSA should take action as a matter of priority to ensure that they are in compliance with the e-invoicing requirements by the applicable deadlines. There are now less than 60 days remaining until the go-live date for the first phase, and as such, businesses should ensure that they are in a compliant position by the deadline to avoid penalties for non-compliance.
 

UAE developments

Abu Dhabi Customs adopts the Post Clearance Audit (PCA) system

Abu Dhabi Customs has launched the Post Clearance Audit (PCA) System to ensure the following:

• Facilitating and simplifying customs procedures at the various ports of entry in Abu Dhabi.
• Focusing on the PCA processes after the completion of customs declarations based on smart targeting criteria.
  
• Assuring the Importer/Exporter’s compliance with customs-related laws
  and regulations. 

As a result, and in order for the Importer/Exporter to gain a variety of customs facilities and to avoid fines/penalties or additional charges resulting from PCA they have to:

• Ensure that they fully comply with the customs rules, regulations, and other related laws.
  
• Ensure that they declare the correct and accurate information in terms of goods  description related to origin, value, classification and quantity - Use customs exemption codes legitimately.
   

Kuwait developments

Kuwait Customs launches a guide on the estimated customs fees related to the services provided for import/export shipments

The General Administration of Customs (“GAC”), has launched a guide in relation to the estimated customs fees related to services provided for import and/or export shipments.  

The guide is part of wider development strategies which include a unified regulatory framework for customs services fees and a simpler and integrated description of services. This is in addition to the complete price list that is available at all customs offices and their websites. 

The guide aims to provide awareness to importers/exporters for all estimated customs fees due on services provided for their various shipments, based on several criteria determined by the system, in an effort to enhance the concept of transparency for the trading community.  
 

Egypt developments

The Egyptian Customs Authority issues a circular on the pre-registration system (ACI) for shipments

The Egyptian Customs Authority issued Circular No. 54 of 2021 on the pre-registration system (ACI) in seaports, with the purpose of speeding up the completion of transactions related to this system.

The circular was issued following periodic follow-ups during the trial operation period of the pre-registration system for shipments, which began in April 2021, and what was agreed upon with MTS, the project execution company.

With respect to cargoes shipped to Egyptian seaports as of October 1st and which are subject to the ACI system, the circular highlighted that importers or their agents are required to meet the ACI requirements, the most important of which are: 

• The Egyptian importer should have an active account(s) on the electronic portal (window) and an e-token(s). 
• The foreign exporter should have an activated account(s) on the (cargo X) platform.
• The foreign exporter should send the shipment documents and details electronically in accordance to the ACI system requirements, including the structured data for the invoice. 

With respect to shipments related to used spare parts and personal luggage that arrive to Egyptian seaports, one or more custom tariffs are to be included and customs officers will determine the actual custom tariffs during inspection.

Other developments

WTO launches new online tool to help users navigate changes in product nomenclatures

On 7 October 2021, the WTO launched a Harmonized System (HS) which essentially allows the tracking of the changes in the Harmonized Commodity Description and allows for the classification of traded goods.

The HS amendments will be effective from 1st January 2022, which will support the customers official and traders. The Word Customs Organization (WCO) has also assisted with the developments of the HS Tracker.

More information regarding the new tool can be found here. 

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.