GCC Indirect Tax Weekly Digest

KSA developments
 

ZATCA publishes guide on Decision to reclassify VAT field violations
 

The Board of Directors of the Kingdom of Saudi Arabia (KSA) Zakat, Tax, and Customs Authority (ZATCA) recently issued a Decision regarding the reclassification of Value Added Tax (VAT) field violations

ZATCA has published a guide in English and Arabic on the reclassification, which took effect on 30 January 2022.

The guide provides a summary of the penalties applicable for a variety of field violations, which include (but are not limited to) violations relating to issuing valid tax invoices, record keeping, calculation of tax due, or preventing ZATCA employees from performing their duties. In addition, the field violations include electronic invoicing (e-invoicing) violations.

ZATCA states that as a first step, it will alert taxpayers about violations and give them a period of three months to address the violation (except for the violation of preventing/obstructing ZATCA employees from performing their duties), after
which the penalties will apply as indicated in the guide.

The guide contains numerous examples illustrating the reclassified penalties.
 

ZATCA introduces new smartphone application
 

Continuing with its digital transformation agenda, ZATCA has introduced a new customs application for smartphones called “ZATCA”. The application is aimed at complementing services currently being offered primarily through the ZATCA website and at ZATCA branches.

Notable features of the application include; electronic payments, viewing account statements, process and submission of Customs declarations. The ZATCA application is expected to revolutionize taxpayer’s engagement with the tax authority while reducing costs and increasing efficiency.

For further information on the “ZATCA” application, please visit this link.
 

Saudi Ports Authority appoints Hong-Kong based company as shipping agent in KSA
 

The Saudi Ports Authority (Mawani) has granted a shipping agent license to Orient Overseas Cargo Line Company, a Hong Kong based logistics magnate.

This is a key step in establishing KSA ports as an attractive and vibrant logistics center. Eventually, this is expected to attract more trade (import and export) to KSA ports and enhance investments in this sector. Increased activities at the KSA
ports are targeted to improve the economic outlook in line with the Saudi
Vision 2030.

For further information on this development, click here.

Oman developments
 

OTA publishes new VAT guides
 

As Oman is approaching towards its first anniversary of VAT this April, the Oman Tax Authority (OTA) is continuing its efforts to facilitate VAT compliance and administration, and has published additional VAT guides (currently in Arabic only).

Please find below a summary of the new guides. In addition, the guides can be accessed here.
 

Overview of the new guides
 

General VAT

This guide sets out general and fundamental principles of VAT in Oman, providing an overview of the rules and procedures, as well as basics of determining the VAT treatment of different types of supplies.

This comprehensive document covers a wide range of topics, including (but not limited to) VAT registration, transactions within the scope of VAT, place of supply, VAT treatment of supplies (with sector-specific issues addressed), taxable value, tax invoices, input tax recovery, the tax return and payment process, record-keeping, and VAT assessments.

It should be noted that similar to other GCC countries which have implemented VAT, the guide clarifies that Oman does not currently recognize any other GCC member state as an implementing state for VAT purposes, and as such these states will be treated as non-implementing states until further notice. This means that exports of both goods and services to GCC member states need to be treated as if they were made to countries outside the GCC.

Transportation

This guide provides an overview of the VAT treatments of international and local transportation in the Sultanate. The guide specifically covers the following:

• International transport and certain associated services;
• Local transportation services;
• Qualifying means of transport; and
• Input tax deduction on costs related to local and international transportation.

The guide is a must-read not just for those in the travel and transport sectors, but also any business in Oman which has transport involvement in its supply chain.

Related Persons

This guide reflects the OTA’s interpretation and attitude to the application of VAT on related person transactions. It includes clarifications regarding VAT treatment on supply of goods and services to, from and between related persons and the VAT obligations which may arise.

The guidance also touches on VAT grouping, valuation (including on supplies to employees), time of supply applications and topics like VAT on transfer pricing adjustments.

Reverse Charge Mechanism

The Reverse Charge Mechanism (RCM) is one of the more complex VAT
topics, so this guide should help businesses in Oman that receive supplies from
non-resident suppliers determine their obligations from a VAT perspective.

The guide addresses:

• The scope of the RCM and exclusions from it;
• Tax due date and reporting requirements in periodical VAT returns for the RCM; and
• Input tax deduction rules.
   

Comment and viewpoint
 

The release of these guides is intended to increase awareness of VAT in Oman.

The onus is on businesses and taxpayers to be compliant; the first year of VAT in Oman has been a transitional period that we expect may now translate into tougher assessment and enforcement action by the authorities as VAT enters its second year.

It is very important that the information/data taxpayers submit through VAT
filings is as correct as possible to avoid audits, additional tax labilities
and penalties. Taxpayers may consider conducting a VAT compliance review or
health check accordingly.

Egypt developments
 

The Egyptian Customs Authority publishes a simplified Advanced Cargo Information document
 

The Egyptian Customs Authority has published a simplified Advanced Cargo Information (ACI) document.

The ACI document outlines the processes and procedures required from the Importer, Exporter of record and the Customs Broker.

The document covers the following steps:

• First time registration on the ACI system:
  • Information required from the Importer of record and the Customs Broker (i.e., registration number, address, email, etc.).
  • Information required from the (foreign) Exporter of record (i.e., company information and personal data).
• Before Importing the goods into Egypt:
  • Information required from the Importer of record or the Customs Broker regarding basic data of the shipment.
  • Information required from a (foreign) Exporter of record (i.e., commercial invoice and to upload all the documents in a PDF format). 
  • Information required from a Customs Broker or Shipping Agent (i.e., send a list of
    shipments, including the data of each shipment).
• After arrival of goods into Egypt:        
  • The Importer of record or Customs Broker will be required to submit documents (i.e., ACI declaration, delivery order and if goods are exempted ‘certificate of
    origin). 

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.