GCC Indirect Tax Digest

Oman developments
 

OTA publishes new clarifications and guidance
 

The Oman Tax Authority (OTA) has published several new clarifications on Value Added Tax (VAT) in Oman, relating to the following:

• Special Economic Zones that qualify as Special Zones for VAT purposes;
• List (in Arabic) of medical equipment and medicines subject to the zero-rate of VAT; and    
• Clarification on certification requirement for zero-rating Oil and Gas related Supplies.

The publication of these clarifications is important for businesses to gain a better understanding of the VAT rules and implications on their business operations in light of the recent implementation of VAT in Oman on 16 April 2021.

Based on our experience in other Gulf Cooperation Council (GCC)
jurisdictions which previously implemented VAT, businesses should expect the
OTA to publish guidelines and clarifications on a wide range of sectors and
transactions. These will be critical for businesses to understand in practical
terms how the VAT legislation applies to complex or sector-specific aspects of
their operations

UAE developments
 

FTA publishes updated guide on VAT refunds for business visitors
 

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published an updated version of its guide on VAT refunds for business visitors.

The guide clarifies that, when additional countries are made eligible for the scheme, refunds may only be requested by applicants on expenses incurred on or after the effective date of agreement between their country and the UAE.

In addition, the required documents to be submitted with an application have been updated as follows:

• A hard copy, original tax compliance certificate in Arabic or English including the applicant’s Tax Registration Number (TRN) in their country of registration, attested by the UAE embassy in the country of registration must be provided (replacing the previous requirement to provide a proof of incorporation document); 
• Tax invoices provided with the application must include the applicant’s TRN;
• If the applicant undertakes exempt/non-business activities at home, as an alternative to the requirement to provide a letter from the tax authority in the applicant’s country of registration indicating the applicant’s percentage of recoverable input tax, a self-declaration in Arabic or English may be provided by the applicant; and
• The guide clarifies that system-generated and scanned invoices will also be accepted as original, and all invoices require a proof of payment stamp or receipt to be attached to the invoice. Please note that the stamps must include the supplier’s details.

In addition, the list of eligible countries (which remains the same) has been moved to a separate document here.

The deadline to submit applications for expenses incurred in the 2020 calendar year is 31 August 2021. As such, businesses eligible to apply should carefully review the amended guidance in order to provide the correct documentation to the FTA before the deadline.

In particular, businesses should give consideration to requirements relating to attestation, delivery of hard copies, and demonstrating proof of payment, and allocate sufficient time to have all the required documents ready and provided to the FTA before the deadline.
 

FTA publishes updated Real Estate VAT guide
 

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published an updated version of its Real Estate Value Added Tax (VAT) guide.

Section 13.2 of the guide has been updated in line with the recent update to the UAE VAT Regulations, which amended the period within which a refund claim must be made relating to a new residence built by a UAE citizen to 12 months from the date of completion of the newly built residence. The refund claim was previously required to be made within 6 months of the date of completion of the newly built residence.

KSA developments
 

VAT rate increase expected to be reversed within five years
 

According to media reports, in a recent interview, Crown Prince Mohammed bin Salman of the Kingdom of Saudi Arabia (KSA) indicated that the increased VAT rate of 15% in KSA is a temporary measure which is expected to be in place for a minimum of one year and maximum of five years.

The VAT rate in KSA was raised on 1 July 2020 from 5% to 15% as part of a number of economic initiatives implemented by the KSA government last year in response to the economic impact of the COVID-19 pandemic.

This indicates that the KSA government plans to re-align its VAT regime with the other GCC states which have retained their standard rate of VAT at 5%. As such, businesses should expect potential tax policy changes in the coming months and years as the economic impact of the pandemic subsides.

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.