GCC Indirect Tax Weekly Digest

Oman developments

OTA publishes VAT Executive Regulation in English

The Oman Tax Authority (OTA) has published the unofficial English translation of the Value Added Tax (VAT) Executive Regulations.

The Executive Regulations were published in Arabic earlier this month, and provide implementing guidelines to the VAT Law which will come into effect from 16 April 2021.

Businesses making supplies in Oman should consider the implications arising from the Executive Regulations and review their approach to compliance obligations. In particular, businesses should take note of the provisions in the Executive Regulations relating to exemptions and zero-rating, compliance and payments/refunds, invoicing and record keeping, and appeals and penalties.

UAE developments

FTA publishes VAT Public Clarification on bad debt relief

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published a VAT Public Clarification on adjustment on account of bad debt relief.

VATP024 clarifies the conditions which must be met in order to benefit from the bad debt relief scheme, whereby a supplier who does not receive payment from a customer may under certain circumstances adjust the output VAT on the bad debt. The requirements for bad debt relief are as follows:

• VAT on the supply should have been charged and accounted for;
• Consideration for the supply should have been written off in full or in part;
• More than six months should have passed from the date of supply; and
• The supplier should have notified the customer of the amount to be written off.

The document clarifies that bad debt relief can only be taken to the extent of consideration written off in the supplier’s accounts, and that the FTA expects the supplier to engage with the customer during the six month period to recover the debt.

Further, the FTA expects the notification to the customer to include at minimum the invoice number and date of the tax invoice which has not been paid, and the amount of consideration written off. Notification may be provided via letter, email, post, or any other similar communication.

The Public Clarification states that while acknowledgement from the customer is not necessary before making the adjustment, the supplier must retain evidence that measures were taken to notify the customer. 

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.