GCC Indirect Tax Weekly Digest

KSA developments
 

Tax amnesty extended to 30 June 2021

Taxpayers in the Kingdom of Saudi Arabia (KSA) should be pleased to learn that the tax amnesty has been extended once again by the Ministry of Finance (MoF) through Ministerial Resolution (MR) No. 2303 dated 7/6/1442 AH (20 January 2021).

Key features

• Applicable on Value Added Tax (VAT), Excise, Income Tax and Withholding Tax (WHT).
• In order to avail of the amnesty, it is important that taxpayers pay the principal amounts of tax due; the level of the delay fine waiver will depend on the point at which the principal amount of tax is paid. Therefore, speed is of essence if taxpayers wish to maximize the benefit. 
• The amnesty will run until 30 June 2021 and allows for waiver of delay fines based on the following:
   

• From a VAT perspective, the correction of VAT returns would also be exempted from the application of delay fines. 
• The amnesty is available in respect of delay fines arising from any assessment (or reassessment) issued by the General Authority of Zakat and Tax (GAZT) in respect of any tax return due for filing before the effective date of the amnesty (i.e. 20 January 2021), provided the principal amount of tax due is settled during the period from January to June 2021.
• Unpaid delay fines should be fully waived if the principal tax liability was settled before the date of the amnesty (i.e. 20 January 2021).

Exclusions

• The amnesty benefits cannot be claimed in respect of penalties arising on account of tax evasion. 
• No relief can be claimed in respect of delay fines settled before the effective date of the present amnesty (i.e. 20 January 2021).

Deloitte’s view

The extension of the tax amnesty provides additional relief to taxpayers from the financial and economic impact of COVID-19. The amnesty provides a great opportunity to correct any past omissions, errors or mistakes. We recommend that prompt action is taken in order to benefit from the various waivers available under the amnesty.

We are in constant communication with the GAZT and shall keep you posted on further developments.

GAZT approves amendments to the Real Estate Transaction Tax Implementing Regulations

GAZT has approved certain amendments to the Real Estate Transaction Tax (RETT) Implementing Regulations. This relates to paragraph (a) of Article (3) and was published in the Official Gazette by the Ministerial Decision No. 2229, dated 7/6/1442H (the Decision).

The Decision has added the following two new cases to the list of transactions that are excluded from the scope of application of the RETT:

1. Disposal of the property by a shareholder/partner in a company by transferring the property in the company’s name, provided that the property is recorded in the company's assets prior to  the effective date of the Regulations, and that the transferor submits audited financial statements - or a certificate - from a licensed chartered accountant proving that the property is listed within the company's assets prior to the effective date of the Regulations and until the date of the disposal.
2. Disposal of the property as an in-kind contribution - by any person - in the capital of a real estate investment fund upon establishing the fund in accordance with the rules and regulations of the Capital Market Authority. This exclusion does not include funds that are established for the purpose of renting properties.

The Decision also added certain conditions to the exclusion related to the disposal of the property as an in-kind contribution by any person as the capital of the joint stock companies where the corresponding shares are not disposed of for a period of five years.

UAE developments
 

FTA restricting the use of form VAT301 on the e-Services portal

The United Arab Emirates (UAE) Federal Tax Authority (FTA) is understood to be restricting the use of form VAT301 (Import Declaration Form for VAT Payment) on the e-Services portal and that users who have a valid TRN and plan to use this form for settlements via their VAT returns, would not be able to use this option going forward.

We understand that the form is being removed in a phased approach and certain taxpayers have already been contacted by the FTA to inform them.

In order to continue to be able to import goods via Customs, taxpayers who are registered for VAT purposes, should ensure that their Customs Registration Numbers (CRNs) are linked to their Tax Registration Number (TRN). Alternatively, taxpayers will only be able to import goods via a clearing company that is registered with the FTA or only use form VAT301 to utilize the payment option.

We understand that going forward, the FTA will only allow the use of form VAT301 using the VAT settlement option, only for a number of specific users that need to obtain specific confirmation from the FTA. 

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.