GCC Indirect Tax Weekly Digest

KSA developments

Tax Amnesty deadline of 31 May 2023 approaching 

The deadline for submissions under the Saudi Arabian Tax Amnesty in the Kingdom of Saudi Arabia (KSA) is rapidly approaching, with the cut-off date set for 31 May 2023. The Zakat, Tax and Customs Authority (ZATCA) had announced an extension of the initiative, allowing for penalties to be waived on a range of taxes including Corporate Income Tax (CIT), Withholding Tax (WHT), Value Added Tax (VAT), Real Estate Transaction Tax (RETT), Excise Tax (ET), and any errors related to e-invoicing.

For non-resident businesses that provide services in KSA on a Business-to-Consumer (B2C) or Business-to-Government (B2G) basis, it is crucial to carefully evaluate whether they should register for taxes within the Kingdom to avoid penalties.

We have developed an approach and methodology to assist businesses in identifying and correcting any errors or issues related to their past VAT returns and other taxes. If you have not yet considered a review of these taxes, our advice is to carry out this exercise at the earliest opportunity.

The reviews can be carried out individually or as part of a coordinated program and some of the key focus areas may include:

• VAT and RETT Health Check
• Excise Tax Health Check
• Corporate Tax and Zakat Health Check
• Withholding Tax (WHT) Health Check
• e-invoicing Health Check

If you have not already done so, we highly recommend that you undertake a thorough review of your taxes as soon as possible to take full advantage of the amnesty benefits before the deadline passes.

Oman developments

OTA publishes VAT guide on Healthcare  

The Oman Tax Authority (OTA) has published a VAT guide for the healthcare sector providing guidance for suppliers engaged in any healthcare services, or supply of goods or services related to the healthcare sector. The guide is currently available in Arabic on the OTA website. 

As per the Oman VAT legislation, the supply of healthcare services by medical professionals or medical institutions in accordance with the laws in force are exempted from VAT. It has now been clarified via the guide that such medical institutions must generally be licensed/governed under the Practice of the Medical Profession and Allied Health Professions (Royal Decree 75/2019), and its corresponding bylaws and Ministerial Decisions. It is further clarified that the medical institutions would include public healthcare centers and clinics; private hospitals, polyclinics, medical centers and clinics licensed under the supervision of the Directorate General of Private Health Establishments. 

In relation to cosmetic and other medical services (such as fertility clinics) it is clarified that such services would qualify for exemption, only where such medical treatments are prescribed by a medical professional as being necessary for health purposes. As an example, elective cosmetic surgeries for aesthetic purposes would not qualify for exemption unless the healthcare professional performs this as part of treating a medical condition or a critical physical discomfort. 

With respect to the zero-rating of supply of medicines and medical equipment under Article 52 (2) of the Oman VAT Law, it is clarified that such zero-rating would apply only for medicines, vitamins, and medical equipment which are included in the lists published by the Ministry of Health and in accordance with the Ministerial Decision 59/2021. 

The guide also provides clarification on sponsorships/donations received by medical institutions. It reiterates that medical institutions which receive any sponsorship/donation must evaluate the VAT treatment on a case by case basis. For example, if there is any legal undertaking provided to the donor/sponsor in return for the donation/sponsorship money, it is most likely that VAT would apply on such sponsorship/donation. 

In our experience, determining which transactions qualify as exempt, zero-rated or standard rated can be a complex exercise. It is thus critical for medical institutions to perform a proper analysis/classification, to ensure that the VAT treatment adopted by them is in line with the VAT legislation. 

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.