GCC Indirect Tax Digest

UAE developments
 

FTA holds digital forum on amendments to administrative penalties
 

The United Arab Emirates (UAE) Federal Tax Authority (FTA) recently held a digital forum on the recent amendments to the administrative penalties applicable to tax violations in the UAE per Cabinet Decision No. 49 of 2021.

The FTA confirmed that the effective date of the Cabinet Decision is 28 June 2021. In addition, the FTA clarified the following key points:

• The objective of the amended penalties is to encourage higher levels of compliance by taxpayers, in particular by facilitating voluntary disclosures (VDs); 
• The fixed penalties applicable for the submission of an incorrect tax return (violation 10 in the Cabinet Decision) are applicable regardless of the imposition of any other penalties, submission of a VD or any tax assessment, with a possible exception applicable only where a tax return is corrected without submission of a VD;
• The penalties applicable for the submission of VDs (violation 11 in the Cabinet Decision) do not apply cumulatively; 
• For the purposes of redetermination of administrative penalties levied prior to the effective date (per Article 3 of the Cabinet Decision), the payment of penalties required by law (i.e. in order to proceed to challenge the penalties at the Tax Disputes Resolution Committee) would not be eligible for the 70% reduction; and 
• Penalty payments may be made in installments, provided that 30% of the penalties are paid before the end of 2021.

Further, the FTA stated that a new dashboard will be available in the taxpayer portal with additional information and details about the application of the amended penalties.

For more details about the amended penalties, please refer to Deloitte’s recent alert.
 

Action to take
 

Businesses should consider how the changes announced to the UAE tax penalty regime apply to them specifically. We recommend that businesses should, as a matter of priority, speak to their tax advisers on conducting a comprehensive review of their tax affairs.

Deloitte has extensive experience in this area, and we would encourage businesses to reach out to us to discuss how we can assist you with conducting an effective and efficient health check exercise. 

KSA developments
 

VAT refund claims for non-resident businesses due by 30 June 2021
 

Non-resident businesses who are carrying out economic activities outside of the Kingdom of Saudi Arabia (KSA) may be eligible for a refund on the Value Added Tax (VAT) they have paid in the Kingdom.

The deadline for submitting a claim for KSA VAT incurred in the calendar year 2020 is 30 June 2021. It should be noted that the KSA Tax Authority is yet to publish the exact formal details of the scheme, however, this should not preclude companies from submitting protective claims in the meantime in the expectation that such a process will be introduced.

Deloitte has a team of VAT specialists based in KSA who can assist you through the process. For more information, please refer to this document.
 

ZATCA publishes e-Invoicing FAQs in English
 

The KSA Zakat, Tax and Customs Authority (ZATCA) has published the English version of its FAQs on the implementation of electronic invoicing (e-Invoicing) in KSA. The FAQs were previously published in Arabic.

E-Invoicing will be implemented in KSA in two phases, as follows:

• Phase 1 (Generation phase) – enforceable from 4 December 2021      
• Phase 2 (Integration phase) – enforceable from 1 January 2023

The FAQs provide insight into the technical requirements taxable persons need to consider in order to have the necessary capabilities in place by the deadline for each phase

ZATCA published the e-Invoicing Implementation Resolution in Arabic on 28 May 2021. The Implementation Resolution is part of the earlier released e-Invoicing Regulations issued on 4 December 2020 and describe the functional and technical requirements for the implementation of e-Invoicing in KSA.

Oman developments
 

VAT clarification issued for the oil and gas sector

The Oman Ministry of Energy and Minerals (MEM) released letter no. MEM/US/1161/2021/2830 dated 31 May 2021, which provides clarification on certain critical transactions for the oil and gas sector like cash calls, quality bank adjustment, etc. from a Value Added Tax (VAT) perspective.

This clarification has come directly from the MEM in consultation with the Oman Tax Authority (OTA) and they will continue to work together to provide further clarity on sector specific transactions/issues from time to time.

The OTA’s clarification addresses a number of topics of particular importance to the oil and gas sector, including the applicability of VAT on cash calls, Quality Bank Adjustments, and Pipeline Tariff Charges.

For details of the clarifications provided, please refer to Deloitte’s alert.

Businesses operating in the oil and gas sector in Oman should familiarize themselves with the clarification and review their current operations and transaction structure to determine any changes that need to be made to be in a compliant position.

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.