United Arab Emirates (‘UAE’) Updates

Value Added Tax (‘VAT’)

1. Decision (1) of 2019 on Maximum Amount of Cash Refunds Under Tourist Refund Scheme 

A new decision effective from the 1^st of June 2019 has been released on the maximum amount of cash VAT refunds allowed under the Tourist Refund Scheme (‘TRS’)

According to this, the cash VAT refund shall be limited to a maximum of AED 7,000 per Overseas Tourist per 24 hours.

The Decision can be accessed here

2. Designated Zones

With effect from the 4^th of July 2019, the list of designated zones has been updated and three new free zones have been added to the list.

The free zones are located in Ras Al Khaimah and are as mentioned below:

• Al Hamra Industrial Zone
• Al Ghail Industrial Zone
• Al Hulaila Industrial Zone

The updated list can be accessed here

3. Designated Charities

With effect from the 4^th of July 2019, the list of designated charities has been updated and seven new charities have been added to the list.

The charities are as follows:

• UAE Deaf Association;
• Sandooq Al Watan;
• Hamdan Bin Rashid Al Maktoum Foundation for Distinguished Academic Performance;
• Sharjah Award for Voluntary Work;
• Sharjah Islamic Affairs;
• Sharjah Charity House; and
• The UAE Board on Books for Young People

The updated list can be accessed here

4. List of Accredited Tax Accounting Software Vendors

The Federal Tax Authority (‘FTA’) has released a list of accredited tax accounting software vendors.

The list can be accessed on the FTA website here

5. Public Clarification on Disbursements and Reimbursements

A public clarification on ‘Disbursements and Reimbursements’ was released by the FTA, specifying the  principles that can be followed to determine whether a particular recovery of expense falls under Disbursement i.e. Outside the Scope of VAT or Reimbursement i.e. charged with VAT.

     The clarification states that, disbursement does not constitute a supply and is, therefore, not subject to VAT. Whereas, reimbursement is considered to be a part of consideration for the supply and follows the same VAT treatment as the main supply.

The Public Clarification can be accessed here

6. Public Clarification on Options and Option Premiums

A public clarification on ‘Options and Option Premiums’ was released by the FTA, clarifying the treatment of VAT on option premiums or options related to debt securities and equity securities to be Exempt from VAT. If these have been made taxable before then adjustments are to be carried out in the return i.e. tax credit note to be issued by supplier to adjust output VAT and input tax adjustment to be done by recipient on receipt of tax credit note from supplier.

The Public Clarification can be accessed here 

7. Transfer of Business as a Going Concern (‘TOGC’)

FTA has issued public clarification on ‘Transfer of Business as a Going Concern’

This Public Clarification discusses the conditions that have to be met for a transfer to qualify as a transfer of a going concern under Article 7(2) of the Decree-Law.

It also clarifies that ‘Share sale Vs. Asset sale’, ‘Asset Sale Vs. Sale of Business’ and the requirements for a TOGC.

The Decision can be accessed here

8. Clarifications User Guide – July 2019 Edition

The FTA has released an updated version of the Clarifications User Guide.

The major change in the updated edition relates to filing of clarification form online on the FTA portal under tab ‘E-forms’ as opposed to sending an email to the FTA.

The updated edition of the guide can be accessed here

Other Updates

1. Press Release: FTA Launches Upgraded Website

The FTA has launched its new and improved website that has been upgraded with advanced display technology. The new site offers users a bundle of services and amenities, facilitates user access to information on the UAE tax system and procedures and allows them to submit their forms online.

The Press Release can be accessed here

2. Press Release: Digital Tax Stamp Scheme to be Implemented on Water Pipe Tobacco and Electrically Heated cigarettes

A Press Release dated 10 July 2019 stated that the FTA has issued a decision whereby “Marking Tobacco and Tobacco Products Scheme” is set to be implemented on water pipe tobacco and electrically heated cigarettes as of November 1, 2019.

The FTA’s press statement went on to explain that the decision was part of its strategy to expand the scope of “Marking Tobacco and Tobacco Products Scheme” to cover all the tobacco products – imported and locally produced and distributed – which will be electronically tracked from production and until they reach the end consumer to ensure full compliance with Excise Tax obligations.

The Press Release can be accessed here

3. Press Release: Eligible Goods for Calculating VAT as per ‘Profit Margin Scheme’

A Press Release was issued on 26^th of July 2019, in which the FTA has determined three main categories of “eligible goods” for calculating VAT on the basis of the profit margin scheme. The categories are as under:

• Second-hand goods, meaning tangible moveable property that is suitable for further use as it is or after repair;
• Antiques, i.e. goods that are over 50 years old and Collectors’ Items, such as stamps, coins, currency and other pieces of scientific, historical or archaeological interest.

The FTA mentioned that only those goods which have previously been subject to VAT before the supply in question should be subject to the scheme.

The Press Release can be accessed here

4. Press Release: FTA Launches New Electronic System to Register Excise Goods

In a press release issued by the FTA on the 17^th of August 2019, it has been announced that the Federal Tax Authority (FTA) has launched a new electronic system for registering Excise Goods as part of its plans to continuously develop the tax system as a whole, and Excise Tax procedures, in particular.

The FTA explained that the new system offers accurate and transparent procedures for registering excise goods with clear guidelines and standards in addition to the new reporting requirements related to excise tax returns and declarations.

The Press Release can be accessed here

5. Press Release: FTA calls on businesses to participate in Workshops

A Press Release was issued on the 31^st of August 2019, calling all businesses to participate in Workshops on Objectives and Procedures of Expanding the Scope of Excise Tax.

The Federal Tax Authority (FTA) has launched a comprehensive awareness campaign about the objectives and processes of expanding the Excise Tax, as well as the procedures for registering in the FTA’s electronic system.

The campaign consists of a series of workshops for non-registered businesses, beginning on September 16, 2019, in Dubai and Abu Dhabi, with subsequent sessions taking place on September 18 and 23 in Dubai and Ajman.

The Press Release can be accessed here

6. Excise on Sugar Sweetened Products and Other Tobacco Products

In an announcement made by the UAE Cabinet, 50% Excise Tax will be applicable on Sugar Sweetened Beverages and a 100% tax on electronic smoking devices equipment.

Excise tax will be levied on any product with added sugar or other sweeteners, whether in the form of a beverage or a concentrate, powder, extract or any product that may be converted into a beverage and on electronic smoking devices and equipment, whether or not they contain nicotine or tobacco, as well as the liquids used in electronic smoking devices and equipment.

More details on the announcement can be read here

GCC Updates

Kingdom of Saudi Arabia (‘KSA’) Updates

1. Amendments in KSA VAT Implementing Regulations

The General Authority of Zakat and Tax (‘GAZT’) in KSA has published amendments to the following sections of the Implementing Regulations.

• Article 33 – Services provided to non-GCC residents
• Article 65 – Security
• Article 66 – Records
• Article 70 – Refund of tax to designated person
• Article 77 – Tax representative, tax agents and appointed person
• Article 79 – Transitional provisions

The amendments (in Arabic) can be accessed here

2. English Translation

The General Authority of Zakat and Tax (‘GAZT’) in KSA has issued an English version of the guide explaining the process of filing requests with GAZT.

The guide can be viewed here

Bahrain 

1. VAT Return Modifications 

The Bahrain National Bureau for Revenue (‘NBR’) has published a VAT Return Modification guide which provides guidelines on adjustments, corrections and self-amendments in the VAT return.

2. VAT Real Estate Guide 

The National Bureau for Revenue (NBR) has released an updated version of the VAT Real Estate Guide. This guide also highlights the extended list of transactions which are not treated as exempt supplies of real estate.

3. VAT Grouping Requirements

The NBR has clarified the requirements that are to be met in order to form a VAT Group.