GCC Indirect Tax Weekly Digest
March 9, 2021
GAZT publishes E-Commerce VAT Guide (electronic shops) in Arabic
The Kingdom of Saudi Arabia (KSA) General Authority of Zakat and Tax (GAZT) has published a guide explaining the Value Added Tax (VAT) obligations of [online] electronic shops (registration, reporting and other relevant obligations). The information provided in the guide applies to all electronic shops which engage in a commercial activity through the following platforms:
- Social media platforms (Instagram, etc.)
- Instant messaging (WhatsApp, etc.)
- Shopping applications
Electronic shops which have sales exceeding the mandatory registration threshold must acquire a commercial registration, register for Value Added Tax (VAT), portray the registration certificate in the electronic shop platform, submit returns and pay any VAT liabilities due. Electronic shops can also elect to register if sales exceed the voluntary registration threshold.
The guide also clarifies that the VAT registration certificate must be reflected clearly in the electronic platform to avoid penalties which can reach up to SAR 50,000 for non-compliance in this regard.
The guide includes interactive links and examples to help taxpayers understand various obligations which could apply.
VAT refunds for non-resident businesses
The KSA VAT law provides non-resident businesses with the possibility to request for refunds of KSA VAT incurred in the course of their business activities. Although the KSA has not formalized the process for submitting, processing and granting such refunds we recommend you to submit a “protective claim” for the VAT incurred during 2020 before the deadline of 30 June 2021. Although the legal status of such protective claim is not certain, not filing a request before 30 June 2021 will likely close the possibility of obtaining a refund once the process is formalized.
FTA publishes Basic Tax Information Bulletin for artists and social media influencers
The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published a Basic Tax Information Bulletin for artists and social media influencers. The Bulletin is relevant to the following persons:
- Individuals who make supplies in their personal capacity as performers, singers, dancers, stage artists, etc. who are referred to as “artists” in the Bulletin; and
- Social Media Influencers (SMIs), who are individuals who provide their services using social media to promote products and services such as bloggers, YouTube hosts, etc. who are referred to as “SMIs” in the Bulletin.
The Bulletin provides guidance on the VAT registration obligations of the resident and non-resident artists and SMIs, and also discusses the VAT implications in respect of the supplies made by such artists and SMIs.
The Bulletin highlights the instances where tax invoices are required to be issued, and where simplified tax invoices may be issued. In addition, the Bulletin clarifies that artists and SMIs are eligible to recover input tax incurred to make taxable supplies with the exception of specifically blocked items.
Finally, the Bulletin lists a number of specific issues which are relevant for artists and SMIs and provides the FTA’s position in relation to such issues.
VAT registration update
As highlighted in our previous alerts and communication, the Sultanate of Oman has opted for a staggered registration process during this transitional period and the first wave of Value Added Tax (VAT) registrations commenced for businesses with an annual taxable supply of more than OMR 1 mil (~USD 2.6M) from 1 February 2021. In this context, we understand that the Oman Tax Authority (OTA) will continue to accept registration applications beyond 15 March 2021 until the VAT go-live date on 16 April 2021. Businesses who are required to register for VAT should apply at the soonest, if they have not already done so.
Additionally, we are anticipating that the OTA will draft further guidelines on registration by non-resident businesses; as well as local businesses who do not have a commercial registration certificate issued by the Ministry of Commerce or Industry and Investment Promotion. We will continue to monitor the situation and keep you informed as soon as we know more.
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.