GCC Tax & Other Regulatory Communique February 2025

1.?UAE VAT UPDATES

Cabinet Decision on expanding RCM?applicability on precious metals and stones

The Ministry of Finance (‘MoF’) of UAE has recently announced issuance of Cabinet Decision No. 127 of 2024 expanding the application of the RCM to include precious metals and stones for VAT registered businesses in the UAE. Said Cabinet decision repeals the earlier Cabinet decision No. 25 of 2018 which was applicable only on supplies of gold and diamonds among registered dealers. It is to be noted that under the new decision, suppliers in the precious metals and stones sector will no longer need to charge VAT on their B2B transactions or remit VAT to the FTA.

Public Clarification on Crypto Currency Mining?

The Federal Tax Authority ('FTA') of UAE has recently issued VAT Public Clarification on "Crypto Currency Mining". As per said clarification, crypto currency mining by a person for his own account is not a taxable supply and falls outside the scope of VAT. However, mining of crypto currency on behalf of another person i.e. supplying computational power, is considered to be a taxable supply of service. It is to be noted that Input tax incurred on expenses by a person mining for his own account would not be recoverable as the person would not be incurring said expenses to make a taxable supply.

Notification in relation to VAT Registration

The FTA of UAE has started sending notifications to the entities registered for Corporate Tax in UAE but are not registered for VAT. Said notification emphasizes on VAT registration and serves as a critical reminder to ensure compliance with UAE VAT Legislation as well. As per said notification, if the registrant in Corporate Tax in UAE is meeting the legal requirements for VAT registration, said person should submit a VAT Registration application in order to ensure compliance and avoid potential penalties.

2.?UAE CORPORATE TAX UPDATES

Cabinet Decision No. 142 of 2024

The UAE Ministry of Finance released the legislation introducing a Domestic Minimum Top-up Tax (“DMTT”) for multinational enterprises (“MNEs”), through the publication of Cabinet Decision No. 142 of 2024? introducing a 15% Global Minimum Tax effective January 1, 2025. This follows the announcement made by the Ministry on December 9, 2024. The legislation is broadly aligned with the Organization for Economic Co-operation and Development (OECD) Inclusive Framework.

The UAE’s DMTT will target multinational enterprises with revenues exceeding €750 million (approx. Dh3 billion), as per OECD’s Pillar 2 rules. Certain entities, including governmental bodies, non-profits, and investment funds, are excluded. However, free zone persons are not exempt.

3.?UAE OTHER REGULATORY UPDATES

New feature on the Emara Tax portal

The Federal Tax Authority ('FTA') of UAE has introduced a new feature on the Emara Tax portal which allows users to track the status of service requests raised with the FTA. Said feature is similar to the existing Tax Registration Number (‘TRN’) verification feature available on the portal. Said new feature would enable taxpayers to monitor the progress of their pending inquiries, complaints etc. raised on the portal and shall bring more transparency and efficiency in managing tax related compliances.

Implementation of updated Excise Tax on E-Smoking and Beverages

The Ministry of Finance ('MoF') of UAE?has issued a Ministerial Decision No. 1 of 2025 applying Excise tax to liquids and devices used for electronic smoking, whether or not containing nicotine or tobacco, classified under harmonized system codes?the Common Schedule for Classification and Coding of Goods for the Gulf Cooperation Council (GCC) Countries. The decision also sets the excise price for Concentrates, powders, gels, and extracts used to make carbonated, energy, or sweetened drinks, based on standard price lists or designated selling prices.

Amendments to Common Customs Law

The Dubai Customs has issued a Customs Notice No. (01/2025) concerning the endorsement of amendments to the Common Customs Law of the GCC States and the Rules of Implementation and Explanatory Notes.?Said amendments shall be applied effective from November 30, 2024. It is to be noted that said move reflects the unified approach among the member states to streamline and enhance the customs tariff structure in the GCC region.

Anti-Dumping Measures on Imports of Electric Fittings etc. from China

The Dubai Customs has issued a Customs Notice No. (02/2025) regarding the imposition of final anti-dumping measures on imports of electrical connectors, switches, plugs and sockets originating from the People's Republic of China to GCC Countries. The final anti-dumping duty shall be collected by Dubai Customs as percentage of Customs Value on Imports as per table provided in the Notice, in amendment to the Customs Notice no. (06/2024) dated November 01, 2024.

4.?KSA VAT UPDATES

Procedures for VAT examinations, evaluations, corrections, and objections

The Zakat, Tax and Customs Authority ('ZATCA') of KSA has issued a guidance?on January 01, 2025, titled "VAT Procedures for Examinations, Evaluations, Corrections, and Objections." Said comprehensive guide outlines the detailed steps on how ZATCA conducts VAT examinations and evaluations, including the criteria and methodologies used. It is to be noted that the Guide details taxpayer obligations, procedures for VAT assessments, corrections of VAT returns, and the process for objecting to ZATCA's decisions, including deadlines and required documentation.