GCC Indirect Tax Digest - 2 September 2022

This is the GCC Indirect Tax Digest, reporting news of Indirect Tax developments in the Middle East region on a bi-weekly basis. The digest is also available in Arabic on the following?link .

UAE developments

Dubai Customs has launched a new voluntary disclosure program

On 11 August 2022, Dubai Customs launched a new voluntary disclosure program called the Self-Audit Findings. This program encourages importers and exporters in the Dubai, United Arab Emirates (UAE) to voluntarily disclose errors and report irregularities that may have been committed while reporting import and export Customs declarations. The aim is to increase Customs compliance levels among businesses based in Dubai and to strengthen trust and transparency.

One of the key advantages of using this service is to avoid any potential penalties associated with the discovered non-compliance transactions by Dubai Customs. The Self-Audit Findings application must be made before a notification of target Customs audit process.

FTA publishes Decision on maximum cash refunds under Tourist Refund Scheme

The UAE Federal Tax Authority (FTA) has published a Decision on the maximum amount of cash refunds under the Tourist Refund Scheme (TRS).

FTA Decision No. 6 of 2022 increases the maximum cash refund of Value Added Tax (VAT) per overseas tourist per 24 hours from AED 7,000 to AED 35,000.

The TRS allows overseas tourists visiting the UAE to obtain refunds of VAT incurred on certain eligible purchases made in the UAE. The change in the maximum cash refund amount is likely intended to promote tourism and shopping by overseas tourists in the UAE.

Oman developments

OTA publishes E-commerce VAT guide

The Oman Tax Authority (OTA) has published a VAT guide on E-commerce, providing guidance and clarification to businesses engaged in transactions via “electronic means” (including via websites, electronic platforms, online stores, social media or apps). The guide is currently available in Arabic here .

The document sets out VAT implications of different types of E-commerce models i.e. Business-to-Business, Business-to-Consumer, Consumer-to-Consumer, and Consumer-to-Business.

The guide explains what constitutes an ‘Electronically Supplied Service’ (ESS) and provides examples to help taxpayers determine the place of supply for VAT of such services. It also details situations under which an overseas E-commerce business would need to seek VAT registration in Oman, and the VAT implications of transactions performed through agents (whether disclosed or undisclosed).

Suppliers of ESS should carefully review the provisions of the guide. It is important to note that there is no minimum turnover threshold for VAT registration for non-resident businesses operating in Oman – it is therefore critical to understand the obligations as well as what options might be available. Once VAT registered, a non-resident business is likely to need to comply with other requirements (including rules regarding the issuance of tax invoices, filing of VAT returns, etc.).

KSA developments

Tax Amnesty: Health Checks to ensure compliance and minimize risk

With the aim to further mitigate the economic effects of the COVID-19 outbreak, the Zakat, Tax and Customs Authority (ZATCA) has announced the relaunch of the initiative to waive penalties on certain taxes, including Corporate Income Tax, Withholding Tax (WHT), Value Added Tax (VAT), Real Estate Transaction Tax (RETT), and any errors relating to e-invoicing. The period to apply for the relief started on 1 June 2022 and will end on 30 November 2022.

What does this mean for your business?

The penalty Amnesty provides an excellent opportunity for businesses to review their past returns on VAT and other taxes, as well as take corrective action where needed. To ensure compliance and minimize the risk of penalties being imposed by the ZATCA after 30 November 2022, we recommend that businesses start reviewing their VAT returns and other taxes as soon as possible.

Deloitte can help

We have designed an approach and methodology to support businesses in identifying and correcting errors and issues in their past VAT returns and other taxes. If you have not yet considered a review of these taxes, our advice is to carry out this exercise.

The reviews can be carried out individually or as part of a coordinated program across all taxes and some of the key focus areas can include:

?VAT and RETT Health Check

• VAT return review, including the impact of the VAT rate increase, transitional provisions, application of zero-rate of VAT, revenue reconciliation and VAT applicability on the accrued revenue, among others.
• IT system review, including transaction mapping and VAT logic.
• Maximize your input VAT credit recovery and managing cash flow.
• Assess the applicability of RETT on the transaction(s) after 4 October 2020, and the possibility to apply for the exemption from RETT.
• Explore an opportunity to apply for a licensed Real Estate Developer refund.
• Review the ongoing cases pending with ZATCA, Internal Settlement Committee (ISC), and/or Saudi General Secretariat of Zakat, Tax, and Customs Committees (GSZTCC).
• Share recommendations on the identified issues, opportunities and to save on penalties.

?Corporate Tax and Zakat Health Check

• Review the submitted Tax/Zakat returns along with the financial statements to check if the returns have been filed accurately.
• Review the current Tax/Zakat calculation methodology.
• Identify the expenses and items in the Tax and Zakat calculation which may likely result in additional Tax and Zakat for the company.
• Identify the areas which could result in potential Tax and Zakat savings for the company.
• Review the final assessments issued by ZATCA for prior years.
• Review of the objection appeal memos and appellate decisions relating to the assessed years.
• Prepare a high-level analysis and findings report to advise the exposure of additional taxes and Zakat.
• Provide recommendations on the identified issues and opportunities with the aim to explore the opportunity to apply for the Amnesty and save delay fines and penalties.

WHT Health Check

• Review the annual withholding return, compare the annual WHT returns with the monthly WHT returns.
• Compare the information disclosed in the Tax and Zakat declaration (movement schedules) with the annual WHT form.
• Compare the amounts reported in the annual WHT return with that in VAT returns (for applying reverse charge VAT).
• On a sample basis, review the treaty benefits claimed by the company when filing the monthly WHT returns to determine the strength of the company’s claim.
• Review material contracts to ensure the appropriateness of the WHT rate applied.
• Advise the potential WHT exposure and provide quantification of the applicable delay fines and penalties which may be payable by the company.

E-invoicing Health Check

• Review phase one of the e-invoicing process and highlight the missing data points and system requirements among others.
• Validate the readiness of phase two of e-invoicing and identify the gaps.
• Share recommendations on the issues identified for phase one and the gaps to cover for the phase two implementation.

This is an excellent opportunity to be able to deal with any past errors or difficulties in a practical and effective manner.

Deloitte recently held a webinar on the Tax Amnesty, in both English and Arabic, which can be accessed here .

Deloitte events

Deloitte Customs and Global Trade Academy | Module 1: Key fundamentals impacting your business

The Deloitte Indirect Tax team is pleased to announce the launch of its Customs and Global Trade academy. The first module of the academy will be held in-person in both the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) in September 2022. The sessions will be conducted in English and Arabic dependent on the location. The full academy details, including the dates per location, are listed below.

Academy objective

Customs and Global Trade requirements have been rapidly evolving across the Gulf Cooperation Council (GCC). This academy is intended to help affected businesses understand the likely scope and scale of these requirements, and what changes might be necessary to accommodate them. It will also provide an opportunity for professionals to network with industry peers.

Module 1 – Topics

The first module of the academy will focus the key fundamentals impacting businesses in the GCC and will cover the following areas:

• Introduction to Customs in the GCC
• Harmonized System (HS) Code/Tariff Classification
• Preferential/non preferential origin
• Customs valuation
• Customs audits and dispute processes
• Export controls and sanctions

Please note that this is a paid event and at the end of the training session you will be awarded a participation certificate. The full academy details are listed below. We look forward to having you at the academy.

Additional details

Dates

• 8 September 2022 | Location: Dubai, UAE | Training in English
• 14 September 2022 | Location: Riyadh, KSA | Training in Arabic
• 15 September 2022 | Location: Riyadh, KSA | Training in English

Venue

The venue per location and date will be communicated in the confirmation email.

Fee

The cost to attend this training is 2,500 AED + VAT (2,500 SAR + VAT) and covers all training materials and meals.

Payment details

Once registered, an invoice will be shared with each participant which includes the payment details.

Registration

Please register your interest on the following link

Duration and agenda

Phase two of the e-invoicing implementation in KSA

E-invoicing was introduced last year in the Kingdom of Saudi Arabia (KSA). Phase one of the implementation, the generation phase, has already gone live on December 4, 2021. Phase two of the implementation, the integration phase, will go live on January 1, 2023. This phase will require taxpayers to integrate their invoicing systems with the Zakat, Tax and Customs Authority (ZATCA) Fatoora Portal in a number of structured waves.

To deal with phase two and to ensure compliance with the regulations, businesses will require detailed systems and processes in addition to considering other changes. Deloitte will be hosting a 60-minute webinar on Monday, 5 September, 2022 to support businesses in preparing for phase two by addressing the following topics:?

• The current e-invoicing landscape in KSA
• The impacts of phase two of the e-invoicing implementation on businesses as compared to phase one
• Lessons learnt from phase one
• Deloitte’s INTax Solution,?capabilities and demo

Please register your interest on the following link .

The land and property sector in the KSA | Key commercial, legal, and tax considerations

The Deloitte Tax and Real Estate advisory teams located in the Kingdom of Saudi Arabia (KSA) are please to invite you to attend our upcoming roundtable discussion taking place on Monday, 19 September 2022 in Riyadh, KSA.?

Real Estate and infrastructure sectors are at the epicenter of Saudi Arabia’s Vision 2030 scheme. As per media reports, almost $1 trillion of real estate and infrastructure projects have been announced across the KSA since 2016. With the ongoing pace of development and infrastructure activities in the Kingdom, businesses will need to manage their commercial, legal, and tax aspects carefully in an already fast paced and ever evolving environment.

During this roundtable discussion, our Tax and Real Estate experts, together with Legal experts from Baker McKenzie, will share their insights, amongst others, on the following topics:

• General thematic trends being observed in the KSA Real Estate market;
• Legal aspects to be considered from a Real Restate perspective, including typical investment structures to be considered for investment in the KSA and the real estate foreign ownership laws;
• A snapshot of the key Value Added Tax (VAT), Real Estate Transactions Tax (RETT), Tax and Zakat implications on the land and property sectors, with special focus around the impact on introduction of RETT on Public Private Partnership (PPP) contracts.

To?register your interest, please contact Monique Wolmarans .

Note:?This digest is for information purposes only and should not be construed as an 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.?