1. Public Clarification (VATP023): Temporary Zero-rating of Certain Medical Equipment
The Federal Tax Authority (FTA) of the United Arab Emirates (UAE) published a VAT Public Clarification - Temporary Zero-rating of Certain Medical Equipment (VATP023) which explains the temporary application of VAT at the 0% rate on certain supplies and imports of medical equipment following the Cabinet Decision No. 9/12 O of 2020 (“Cabinet Decision”) and Ministerial Decision No. 380 of 2020 (“Ministerial Decision”) issued by the Minister of Health and Prevention on 6 December 2020.
Details of the Public Clarification are summarized as follows
2. Restriction on VAT301 Form email from the FTA
The FTA communicated to the VAT registrants that the form VAT301 will be deactivated shortly for all users who have a valid TRN and plan to use this form for settlements via their VAT returns.
VAT registrants who have a valid TRN, in order to continue being able to import goods via Customs, shall ensure that his Customs Registration Number (CRN) is linked to the Tax Registration Number (TRN). Those VAT registrants who do not have a Customs Registration Number (CRN), need to register with the Customs Department and link the new Customs Registration Number (CRN) with his Tax Registration Number (TRN). Alternatively, the VAT registrant 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.
VAT registrants from the categories shown below can still use the VAT301 and request to open form VAT301 for VAT settlements based on customs declarations through FTA online services:
To submit application to open VAT301 form please visit the following link:
Further to the FTA’s notice published last month, additional details on the new Excise Tax stock reporting requirements have been issued, including a virtual workshop held by the FTA on December 8th, 2020 to guide the Excise Tax Warehouse Keepers on how to remain compliant to the new requirements.
New taxpayers guides have been issued to ensure clarity of the new requirements, and other existing guides have been updated to reflect additional procedural steps to complete the relevant declaration forms, and comply with the new reporting obligations when submitting the Excise Tax return.
The new reporting requirements are due starting January 1st, 2021, and businesses need to ensure that they are well prepared in order to avoid any potential disruptions in their Designated Zones operations, including potential penalties or suspension of stock movement.
Link to the PwC news alert:
1. Regulations issued by the General Authority of Zakat and Tax (‘GAZT’) on E-Invoicing
After completing the public consultation process in relation to the E-invoicing regulation, The GAZT board of director approved the final version of the E-invoicing regulation and published it in the official Saudi gazette on 4 December 2020. These Regulations, which entered into force from the date of their publishing, contain the framework of the E-Invoicing mechanism GAZT is anticipating to apply within the effective date and expects persons subject to the E-invoicing regulation to comply with as of 4 December 2021.
A detailed newsalert has been issued by PwC on this matter which can be accessed through the following link:
The Regulation has been issued in English and Arabic languages and can be accessed through the following links:
2. Refund of VAT to licensed Real Estate developers
In accordance with the directions stipulated in the Royal Order Number A/84 dated 14/2/1442 AH (corresponding to 1 October 2020), the Board of Directors of the General Authority of Zakat and Tax (“GAZT”) issued a Ministerial Resolution number 1754 dated 15/04/1442 AH (corresponding to 30 November 2020) approving the conditions and terms for considering a licensed real estate developer as qualified persons to refund input VAT incurred in relation to real estate supplies that became exempt from VAT as of 4 October 2020.
The Ministerial Resolution enters into effect from the date of issuance i.e. 30 November 2020.
The PwC news alert issued on the matter can be accessed through the following link:
1. Guideline issued by the GAZT on E-Invoicing
GAZT issued a detailed guide on E-Invoicing that provides clarification related to application of E-Invoicing.
The guide provides additional information over the requirements established under the E-invoicing regulations and includes i) The definition of an E-invoice, ii) The timeline to implement E-invoicing in KSA, iii) The taxpayers who will be subject to the regulations of E-invoicing, iv) The Preliminary and basic requirements for technical solutions related to E-invoicing, and v) The violations and penalties.
GAZT has also included timelines dating back to September 17, 2020 where it had initially published the draft Regulations for E-invoicing for public consultation and has highlighted important dates such as:
The guideline has been issued in English and Arabic versions and can be accessed through the following links:
GAZT also issued a document containing FAQs along with their responses which can also be accessed through the following links:
2. Tax ruling request template
A new template has been released by GAZT for submitting a tax ruling request. All tax rulings need to be submitted using the new template otherwise these might be rejected from GAZT as per the information available.
3. GSTC guide for grievance before the Committee for resolution of tax violations and disputes
The General Secretariat of the Tax Committees (‘GSTC’) issued a new guide which elaborates the process for filing appeals against zakat/tax decisions, statement of claims, scheduling sessions and view decisions issued by GSTC etc.
It also highlights important timelines that need to be considered by taxpayers while submitting appeals/claims. The guide is issued in Arabic language at the moment and can be accessed through this link.
The National Bureau for Revenue (NBR) has amended the “use and enjoyment” rules under which the place of supply for certain telecommunications services is determined for VAT purposes. The public clarification sets out that, with effect from 1 February 2021, the place of use and enjoyment will be the place of residence of the customer, regardless of whether the customer is a business or a consumer and will be determined as follows:
For telecommunications services that require the customer to be physically present in a specific location to use them (such as a wi-fi hotspot or an internet café), the place of use and enjoyment is that specific location. There is no change to the place of supply for such services and suppliers of such services should continue to charge Bahrain VAT where such services are provided from a location in Bahrain.
For all other telecommunications services, the place of use and enjoyment is the place of residence of the customer. The supplier of the service should determine the place of residence of the customer by reference to the following:
Where any of the above is in or refers to Bahrain, the place of residence will be Bahrain unless the customer can provide satisfactory evidence to the supplier to confirm that his actual place of residence is in another country. However, the place of supply cannot shift from Bahrain where the country code of the SIM card is Bahrain even where the customer can provide evidence of actual residence in another country.
This update from the NBR will have a significant impact on the VAT treatment of supplies by both local and foreign telecommunication providers (telcos). The public clarification provides details on the VAT implications for both resident and non-resident telcos following this update.
A link to the PwC newsalert can be found below:
A link to the Public Clarification can be found below:
Indirect Tax Leader
Tel: +971 (0) 4 304 3744
Indirect Tax Partner
Tel: +971 (0) 4 304 3688
Antoni A Turczynowicz
Tax Partner & Managed Services Lead
Tel: +971 (0) 4 515 7372
Partner, Middle East Customs & International Trade
Tel: +971 (0) 4 304 3936
Partner, Tax Leader, Bahrain
Tel: +973 1711 8886
Chadi Abou Chakra
Partner, Indirect Tax and Fiscal Policy
Tel: +966 11 211 0400 Ext: 1858
Partner, Middle East Indirect Tax and Fiscal Policy
Tel: +971 (0) 56 216 1109