Base Erosion and Profit Shifting (‘BEPS’)
On 16th May 2018, Organization of Economic Development (‘OECD’), announced that the UAE has become a member of the Base Erosion Profit Shifting inclusive framework (‘BEPS IF’). Being a BEPS member, UAE was required to commit to the BEPS minimum standards i.e. UAE would be required to commit to all the Actions listed in the BEPS IF.
UAE has published Cabinet Resolution No. 32 of 2019, thereby introducing country by country reporting (“CbC Reporting”) obligations that multinationals will be required to comply with starting 2020.
Considering the above developments, and in line with OECD’s recommendations, (Action 13 – Guidance on the implementation of Transfer pricing), Multinational groups whose gross consolidated turnover exceeds threshold of AED 3.15 billion (US$857 million) will be required to file a CbC report.
All subsidiaries, affiliates and branches within Multinational Groups will be required to notify the Ministry of Finance (‘MOF’) entity with filing responsibility. The CbC report should include the following details:
- Profits (losses) before income tax;
- Income tax paid;
- Income tax payable;
- Declared capital;
- Accrued profits;
- Number of employees; and
- Non-cash or cash-equivalent assets for each country.
At this stage, multinationals would not be required to file disclosure forms, local files or master files. CbC reports should be submitted with the MOF within 12 months of the end of a Multinational Group's financial year, starting from 1 January 2019.The Multinationals will be required to submit CbC reports during 2020.
Value Added Tax (‘VAT’)
Decision No. 7 of 2019 on Tax Invoices and Credit Notes
A new decision released on 26th of May 2019 with regards to Tax Invoices and Credit Notes that clarifies the following:
- There is no requirement for a Tax Invoice or a Tax Credit Note to include the physical address of the supplier or recipient of goods and services. The respective mailing address i.e. the P.O. Box stated on the Tax Invoice or Tax Credit Note is enough; and
- Tax Invoices and Tax Credit Notes can now be issued in a single document with the header that clearly displays – “Tax Invoice/Tax Credit Note.”
Access the Decision by clicking here
VAT Administrative Exceptions Guide
The Federal Tax Authority (‘FTA’) has also released a user guide on VAT Administrative Exceptions along with the relevant request form. The VAT Administrative Exception is a mechanism which provide registrants with exceptions if difficult circumstances arise preventing them from following certain procedural aspects of the VAT Law or the Executive Regulations.
The guide explains the process of obtaining an Administrative Exception from the FTA with reference to the following topics :
- Tax Invoices;
- Tax Credit Notes;
- Length of the Tax Period;
- Stagger; and
- Extension of time for the export of goods
The Guide can be accessed using clicking here
Public Clarification on Importation of goods by agents on behalf of VAT registered persons
A public clarification on ‘Importation of goods by agents on behalf of VAT registered persons’ was also released by the FTA, explaining the VAT treatment to be adopted in the tax return by VAT registered importing agent and by VAT registered owner of the goods.
The clarification states that the VAT registered importing agent acting on behalf of the VAT registered owner of the goods would be required to make a negative adjustment in ‘Box 7’ of the VAT return to nullify the amount pre-populated in ‘Box 6’ of the VAT Return.
Simultaneously, the VAT registered owner of the goods is required to make a positive adjustment in ‘Box 7’ of the VAT return to include the value of goods imported on its behalf by the importing agent.
Where both parties do not wish to make the adjustments stated above, the importing agent may issue a statement to the owner as prescribed in Clause (7) of Article 50 of the VAT Executive Regulations.
The Public Clarification can be accessed by clicking here
Professional Standards for Tax Agents Guide
The FTA has published a Guide which states the professional standards and code of ethics which are expected from Tax Agents registered with the FTA (and are a part of the register of Tax Agents). The Guide also clarifies the Tax Agents’ duties and responsibilities under the Federal Tax Procedures as well as the Executive Regulations.
The Guide can be accessed by clicking here
Press Release: Introduction of Self-Service Kiosks for Tax Refund Scheme (‘TRS’)
A Press Release was issued on 11th June 2019, stating that the FTA has arranged for self-service kiosks to be established across all of the ports (which are included in the TRS for Tourists). These kiosks are being set up in order to ease the process for tourists to recover VAT when leaving the UAE.
The Press Release can be accessed by clicking here
Documents on the Virtual Stock Guarantee (‘Dubai Customs’)
Dubai Customs have published the application and declaration forms related to the Virtual Stock Guarantee.
The Customs Policy Notice published in March 2019, can be accessed by clicking here
The Forms (applications and declarations) regarding the Virtual Stock Guarantee facility can be found by clicking here
Digital Tax Stamps (‘DTS’) Updates
In addition to Customs Notice 5/2019, Customs Notice 7/2019 was released banning the importation of all types of hookah molasses and e-cigarettes without a DTS. This decision is effective as of the 1st of March 2020.
The CN7/2019 can be accessed clicking here
KSA (Kingdom of Saudi Arabia)
Retail Sector Guide
The General Authority of Zakat and Tax (‘GAZT’) in KSA has published a VAT guide on the retail sector.
The Guide (in Arabic) can be accessed by clicking here
Excise Tax on Sweetened Beverages
The General Authority of Zakat and Tax (‘GAZT’) in KSA has announced that Excise Tax will apply on sweetened beverages from 1st of December 2019.
The announcement (in Arabic) can be viewed by clicking here
Excise Tax implementation update
Excise Tax was implemented in Oman on 15th June 2019. The Secretariat General for Taxation (‘SGT’) in Oman has recently announced that the electronic system (E-System) for Excise Tax registration of taxpayers is complete.
Excise Tax: Transitional Return
Article (15) of the Decree Law 23/2019, published on 17 March 2019, specified that the Transitional Return of Excise Tax was due by the 30th June 2019. However, the SGT have extended the due date for submitting Excise Tax Transitional Return to 15th July 2019. Importers, Taxpayers who hold a stock of Excise Goods (stockpiler), importers as well as local producers of Excise Goods are required to submit the Transitional Returns.
The announcement can be viewed by clicking here
Ministerial Decision 112/2019 - Ministry of Finance (Oman)
The Ministerial Decision confirms that the rate of Excise Tax on Tobacco and tobacco products, Pork products, Alcoholic beverages and Energy drinks is 100 percent; whereas the Excise Tax rate on carbonated drinks is 50 percent.
The Decision (in Arabic) can be accessed by clicking here
VAT Return Filing Manual
The Bahrain National Bureau for Revenue (‘NBR’) has published a VAT Return Filing Manual which provides clarity on filing, payments and refunds.
The Manual can be viewed clicking here