GCC Indirect Tax Weekly Digest

June 8, 2022

KSA developments 

KSA Tax Authorities announce a tax amnesty effective 1 June 2022 until 30 November 2022

On 1 June 2022, the Kingdom of Saudi Arabia (KSA) Zakat, Tax and Customs Authority (ZATCA) announced on its website an amnesty scheme and issued the Guideline for amnesty on waiver of penalties.

All taxpayers can avail of the tax amnesty during the next six months starting from 1 June until 30 November 2022. 

The taxes covered under the amnesty are Value Added Tax (VAT), Withholding tax, Excise, Income tax, and Real Estate Transaction Tax (RETT). Customs duties are not covered within the scope of the amnesty. 

For more information about the amnesty scheme, please refer to Deloitte’s recent alert.

ZATCA amends e-Invoicing Implementation Resolution 

Electronic Invoicing (e-Invoicing) has been live in the Kingdom of Saudi Arabia (KSA) since December 4, 2021. As previously announced, this initiative was structured around two phases:

  1. The Generation phase – now live; and
  2. The Integration phase that will go-live on 1 January 2023

In respect of the Integration phase, it is anticipated that by 1 July 2022, the ZATCA will invite the first wave of taxpayers to integrate their IT systems with ZATCA’s Fatoora Portal, i.e., six months before the second go-live date of 1 January 2023

The ZATCA released an updated draft of the e-Invoicing Implementation Resolution in Arabic on 27 May 2022. The changes made to the Resolution, annexes, and the related technical specifications will mainly be relevant for this latter phase that will go-live on 1 January 2023. Please note that this Resolution is yet to be published in English.

In addition, the ZATCA announced a public consultation where comments can be submitted up until 10 June 2022. This will allow taxpayers, e-Invoicing service providers, advisors, and other interested parties to provide feedback on the updated draft resolution, annexes, and the related technical specifications.

Oman developments

OTA publishes Imports & Exports VAT guide

The Oman Tax Authority (OTA) has published a Value Added Tax (VAT) taxpayer guide in Arabic for Imports and Exports. This guide explains the OTA’s interpretation and guidance on the application of the VAT Law and Executive Regulations relevant to import and export of goods and services.  

This guide is critical to businesses which are engaged in the purchase or sale of goods from/to other countries, export and import of services.The guide would also be relevant for group companies having presence in Oman and outside Oman. The guide is available here.

The guide provides guidance on the following topics relating to imports and exports:

  • Territory of Oman for VAT purposes;
  • Valuation in case of reimport of goods temporarily exported;
  • Eligibility to input VAT deduction;
  • Import of services by taxable and non-taxable persons;
  • Treatment in case of re-export of goods imported for processing;
  • Determination of actual customer in case of export of service. 

UAE developments 

Implementation of the Comprehensive Economic Partnership Agreement between the UAE and India 

The Comprehensive Economic Partnership Agreement (CEPA) between the Governments of the United Arab Emirates (UAE) and the Republic of India (India) was signed on 18 February 2022 and went into effect on 1 May 2022.

The Agreement shall apply to the parties’ respective territories, including their land territory, territorial waters, and airspace above them, as well as other maritime zones, such as the Exclusive Economic Zone and continental shelf, over which the parties have sovereignty, sovereign rights, or exclusive jurisdiction, in accordance with their current laws and regulations and applicable international law.

The UAE and India intend to increase bilateral trade from USD 60 billion to USD 100 billion over the next five years as a result of the CEPA; important products that will benefit immediately include oil and gas, petrochemicals, minerals, textiles, agriculture, jewellery and gems, metals, and other.

The CEPA aims to eliminate duties on over 10,000 tariff lines over a ten-year period, and it is likely to have a significant influence on trade between India, the UAE, and the rest of the Gulf Cooperation Council (GCC) region. To reap the benefits, multinational enterprises should look at the CEPA's origin rules.

Companies should view the CEPA to utilize full benefits. Key benefits include the following: 

  • Providing assurance and market access for UAE businesses in key UAE services sectors like financial, environmental, and transportation services, as well as construction, health, and tourism. The CEPA also establishes clear and transparent trade laws, making it easier for UAE service sector companies to expand into India and export services abroad. 
  • Simplified customs procedures, lower or zero tariffs, and current trade standards have all helped to lower obstacles to goods trade. The CEPA will make it easier and less expensive for new and existing UAE exporters to deal with India, while also benefiting UAE consumers.
  • Shaping the rules for digital trade that safeguard online consumers, allow for the free flow of data, and allow businesses to employ digital technologies while also respecting intellectual property rights. The UAE is focusing on becoming a digital-first economy, and this CEPA will help to remove barriers for UAE companies working in the digital economy, boosting investment in new technologies and speeding up the UAE's digital transformation. 
  • Strengthening economic linkages to promote collaboration on common global concerns. The CEPA with India promotes stronger collaboration and engagement on global issues, such as new technology development, environmental policies and practices, and agriculture, forestry, and fisheries.
  • Providing opportunities for SMEs to export goods and services to India. SMEs are critical in today's knowledge-based economy. The sector employs 95 percent of the UAE's workforce and generates more than half of the country's GDP. This CEPA will provide a platform for UAE-based SMEs to expand and grow into new exciting markets, with improved access to new clients, networks, cooperation opportunities, and procedures for rapid scaling. 

For the full CEPA please refer to the following link

Dubai Customs has also published a Customs Policy No (54/2022) on the conditions and regulations of implementation of the CEPA between the UAE and India which 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.

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