Bahrain
Country by Country Reporting (CbCR) requirements
On 18th May 2018, Bahrain became a member of the Organisation for Economic Cooperation and Development (OECD), and committed to align with the international tax framework, and implement the Base Erosion and Profit (BEPS) minimum standards including CbCR, which is covered in Action 13.
On 4th February 2021, Bahrain published the Resolution No. 28 for the year 2021 introducing Country by Country Reporting (CbCR) requirements.
Scope of application
CbCR requirements apply to every business that has a legal entity or branch in Bahrain and are members of a multinational enterprise (MNE) group with annual turnover of BHD 342 million, with effect from the financial year beginning on the 1st January 2021.
Obligation to submit a CbCR
Each Ultimate Parent Entity (UPE) resident in Bahrain shall submit a report to the Ministry of Industry, Commerce & Tourism for the reported financial year no later than 12 months from the last day of the reported financial year of the MNE.
Obligation to submit notification
A Bahraini Constituent Entity will be required to submit a notification no later than the last day of the reporting fiscal year of the MNE group.
Bahrain CbCR legislation (Resolution No. 28 for the year 2021) can be found here.
Saudi Arabia
E-Invoicing Regulations
On 18 March 2021, the General Authority of Zakat and Tax (GAZT) published the draft of the E- invoicing resolution for public consultation providing the controls, requirements, technical specifications, and procedural rules for Implementing the provisions of the E-Invoicing regulation.
| E-Tax Invoices should include | E-Tax Notes should include | E-Tax Invoices and E-Tax Notes should not include |
|---|---|---|
| Taxable supplies (Standard rate or zero rate)Â | Cancellation or suspension of the supplies | Exempted supplies |
| Export of goods and services | Change of the VAT due | Any payments related to exempted supplies and received by a taxpayer |
| Intra-GCC supplies | Amendment of the supply value | Supplies subject to VAT pursuant to RCM |
| Nominal supplies | Goods or services refund | Import of goods to the Kingdom |
| Any payments received by a taxpayer before the actual supply | Â | Â |
An unofficial English translation of the resolution can be found​ here.​​
The associated technical specifications can be found as follows:
Electronic Invoice Data Dictionary
Electronic Invoice XML Implementation Standard
Electronic Invoice Security Implementation Standards
Please visit the Public Consultation Platform to share your comments through the below button.​
Saudi Arabia’s First Special Economic Zone
General Authority of Civil Aviation (GACA) has launched the first Special Economic Zone (SEZ) under the name of Special Integrated Logistics Zone (ILBZ) located adjacent to the King Khalid International Airport in Riyadh following the issuance of Royal Order (A/17) dated 10 October 2018.
The zone development will offer incentives to companies to establish operations at its site adjacent to the international airport in Riyadh, including:
- 50-year Tax Holiday to include VAT suspension while under customs suspension
- Zero-rated corporate, income and withholding tax on certain payments
- 100% business ownership.
- 100% suspension of customs and import restrictions
- no restrictions on capital repatriation
GACA has now issued the Special Tax Rules explaining the tax and customs incentives with the associated conditions that apply to entities established in ILBZ to carry out specific activities.
To find out more about the new SEZ, click here.
Tax and customs authorities merge into single authority
On 4th May 2021, The Saudi Council of Ministers approved merging of the General Authority of Zakat and Tax (GAZT) and the General Authority of Customs to one form. Now it is known as the Zakat, Tax and Customs Authority (ZTCA).
E-invoicing developmnets
On 28th May 2021, ZATCA published the e-Invoicing Implementation Resolution which provides the final controls, requirements, technical specifications and procedural rules for implementing the provisions of the E-Invoicing Regulation.
The new resolution confirms that the provisions of the electronic billing regulations and the will be implemented in two main phases:
- Issuing, processing, and keeping electronic invoices and electronic notices will be mandated from 4th of December 2021
- Linking electronic billing systems, sending electronic invoices and electronic notices, and sharing the data with the authority will be scheduled to be implemented in stages, starting from 1st January 2023.
The new resolution is published in Arabic only, and can be access from here
Oman
Oman: VAT Registration
Oman became the fourth Gulf Cooperation Council (GCC) member state to implement VAT, following the UAE, Kingdom of Saudi Arabia and Bahrain. According to the Royal Decree No. 121/2020, Oman will apply VAT at the standard rate of 5% which comes into force in from the 16th April 2021.
Who is required to register?
- Any person who has a place of residence in Oman, and conducts a commercial, industrial, professional or other activity and has annual supplies that exceed or is expected to exceed the mandatory registration threshold.
- Any person who does not have a place of residence in Oman but is obligated to pay tax, regardless of the value of supplies made.
Mandatory and voluntary registration thresholds:
- The mandatory registration threshold: The value of annual supplies shall be OMR 38,500.
- The voluntary registration threshold: The value of annual supplies shall be OMR 19,250.
Calculation of annual supplies:
Value of supplies for the purpose of registration shall include the following:
- The value of taxable supplies (Standard rated and zero-rated supplies) - Except supplies of capital assets.
- The value of the goods and services supplied to the taxable person and subject to the reverse charge mechanism.
- The value of Intra GCC supplies of goods and services.
| Â | Before the effective date of the Law | After the effective date of the Law |
|---|---|---|
| The actual annual supplies                              | The total value of supplies made during a 12-month period, which starts from November 1, 2019 to October 31, 2020. | The total value of supplies made during a 12-month period ending on the last day of any month. |
| The expected annual supplies | The total value of supplies that are expected to be made during a 12-month period, which starts from October 1, 2020, to September 30, 2021. | The total value of supplies that are expected to be made during a 12-month period, which starts on the beginning of any month. |
VAT registration due dates and effective dates:
The Oman Tax Authority (OTA) published the guide on VAT registration determining the VAT registration due dates and effective dates.
1. The mandatory VAT registration will take effect in a phased manner as follows:
| Category | Registration timelines |
Effective date of Registration |
|---|---|---|
| For a person with annual supplies exceeds or is expected to exceed OMR 1,000,000 | From February 1, 2021 to March 15, 2021 | April 16, 2021 |
| For a person with annual supplies between OMR 500,000 and OMR 1,000,000 | From April 1, 2021 to May 31, 2021 | July 1, 2021 |
| For a person with annual supplies between OMR 250,000 and OMR 499,999 | From July 1, 2021 to August 31, 2021 | October 1, 2021 |
| For a person with annual supplies between OMR 38,500 and OMR 249,999 | From December 1, 2021 to February 28, 2022 | April 1, 2022 |
2. The Voluntary registration due dates shall start from February 1, 2021, and the effective date of registration is per the date specified in the registration certificate.
You can access all VAT registration guides on the Oman Tax Authority website, here.
Oman Publishes VAT Executive Regulations
On the 14th March 2021, The Sultanate of Oman Tax Authority publishes the VAT law Executive Regulations (Decision 53 of 2021) in Arabic with details on the VAT implementation on 16th April 2021.
Businesses can now get an understanding of the details and finalize the VAT implementation that will apply be taking place from the 16th of April 2021.
The Executive Regulations can be found here.
Extended of Zero-rating food items list
The Oman Tax Authority (OTA) has published the Ministerial Decision no 65/2021 that extends zero rating of VAT from 93 to 488 food items which takes effects from 16th April 2021.
You can download the Ministerial Decision with the updated list, here.
Oman Special Economic Zones
The Oman Tax Authority (OTA) published a new clarification on VAT in Oman, relating to Special Economic Zones that qualify as Special Zones for VAT purposes.
The Public Authority for Special Economic Zones and Free Zones (OPAZ) in coordination with the OTA have announced that the following special zones are classified as Special Zones in accordance with the provisions of Article (102) of the VAT Executive Regulations:
- The Special Economic Zone at Duqm
- The Free Zone in Salalah
- The Free Zone in Sohar
- The Free Zone Al Mazunah
Supplying or transporting goods
As per Article (103) of the VAT Executive Regulations, the conditions for zero-rating of supplying or transporting goods to or within these Special Zones include:
- The customer or the recipient are subject to Tax
- The customer or the recipient be licensed and registered by the operating and supervising authority of the special zone to conduct the activity within the Special Zone
- The customer or the recipient has received the goods for the purpose of that activity within the Special Zone
- The goods shall not be among the goods excluded from the right of deduction in accordance with the provisions of Article (56) of the Executive Regulations
Supply of services
As per Article (107) of the VAT Executive Regulations, the conditions for zero-rating of supply of services to a Special Zone include:
- The customer being registered for VAT
- The client must be a person licensed and registered by the Authority operating and supervising the Special Zone
- The client has received services for the purposes of activity in the Special Zone
- The services do not include restaurants and hotels, food and beverage undertakings and cultural, artistic, sports, educational and entertainment services
- The services should not be exempt from VAT
You can download the Special Zones guideline from here
United Arab Emirates
VAT on the all supplies made by artists and Social Media Influencers (SMIs)
The United Arab Emirates Federal Tax Authority (FTA) has published a basic tax information bulletin clarifying that the supplies made by artists and SMIs are subject to VAT.
VAT registration:
| UAE-based Artists and SMIs                              | Mandatory registration | If the value of their taxable supplies and imports in the last 12 months exceeded, or is expected to exceed in the next 30 days, the mandatory registration threshold of AED 375,000 |
| Voluntary registration | If the value of their taxable supplies and imports in the last 12 months exceeded or is expected to exceed in the next 30 days, the voluntary registration threshold of AED 187,500 | |
| Non-resident Artists and SMIs | Required to register for VAT where they make any taxable supplies with the place of supply in the UAEÂ | |
| There is no registration threshold for non-resident suppliers. | ||
Tax invoices:
Normal tax invoices are required for all standard-rated supplies provided by artists and SMIs, and simplified tax invoices are required to be issued where the supply is made to an unregistered recipient or where the consideration for the supply made to a registered recipient does not exceed AED 10,000.
VAT Input Recovery:
Artists and SMIs making taxable supplies are eligible for a full recovery of input VAT, except for blocked items such as:
- Certain entertainment services
- Purchased, leased, or rented motor vehicles that are available for personal use
You can access the basic tax information bulletin, here.
VAT public clarification on bad debt relief
The Federal Tax Authority (FTA) issued a new VAT Public Clarification (VATP024) on adjustment on account of bad debt relief.
As per Article 64 (1) of the VAT law, the suppliers may be able to adjust the VAT on the bad debts, if their customers do not pay (fully or partially) for any supplies within a specified period.
VATP024 confirms that in order for a taxpayer to recover VAT on bad debts, the following four conditions must be met:
For more clarification you can download VATP024 from here.
VAT public clarification on the tax treatment for some medical equipment
Background:
- On 1st September 2020, the UAE Cabinet issued a Cabinet Decision No. 9/12 of 2020 confirms that 0% VAT will be temporarily applicable on certain supplies and imports of medical equipment.
- On 6th December 2020 the Ministerial Decision No. 380 of 2020 was issued by the Minister of Health and Prevention.
- The FTA issued a new VAT Public Clarification (VATP025) on temporary zero-rating of certain medical equipment which replaces the old Public Clarification (VATP023)
- In accordance with Cabinet Decision No. 15/3 of 2021, the above decisions shall be effective until 31st December 2021
Applicability of Zero Rating on Medical Equipment
VATP25 provides a summary of the zero-rating rules introduced by the above-mentioned Decisions.
The “medical equipment” to which the temporary zero-rating rules apply are personal protective equipment used for the protection from Covid-19, and which contain the features and meet the specifications determined and specified by the Ministerial Decision. Such medical equipment are limited to:
The medical equipment mentioned in the Ministerial Decision are zero-rated in the following circumstances:
1. In respect of supplies of medical equipment, a supply can be zero-rated where the date of supply takes place, and the medical equipment is delivered to the recipient or placed at the recipient’s disposal in the period from 1st September 2020 to 31st December 2021.
2. In respect of imports of medical equipment, an import can be zero-rated when the medical equipment is imported in the period from 1st September 2020 to 31st December 2021.
For more clarification you can access VATP025 from here
New amendment relating to VAT recovery of the new residence for UAE nationals
The FTA has amended Clause (3) of Article (66) of the VAT Executive Regulation, with Cabinet Decision No. 24 of 2021.
The new clause changed the time limit for UAE nationals to submit their new residence special refund application from 6 months to 12 months from the date of completion of the newly built residence.
According to this change, the FTA has published an updated version of the real estate guide which modifies the time limit from 6 to 12 months.
To access the amended VAT Executive Regulations, click here | To access the updated VAT real estate guide, click here.
Basic tax information bulletin for the automotive sector
The FTA has published a new basic tax information bulletin for the automotive sector clarifying the following:
Repair services and parts provided under warranty
VAT is applicable in the first instance on:
- Sale of vehicles that include warranty
- Warranty packages purchased separately by the customer
Any subsequent supply of repair services and parts under warranty claims is not subject to VAT separately as long as no other amount is paid.
Repair and maintenance services
Where repair and maintenance services are physically provided in the UAE in relation to motor vehicles, such services are subject to VAT at the standard rate, even if the costs are charged to an entity based outside the UAE.
You can access the basic tax information bulletin, here.
Tax penalties amended
On 28 April 2021, the United Arab Emirates Government has amended the Cabinet Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE by issuing the Cabinet Resolution No. (49) of 2021.
The new resolution has provided a relief to taxpayers in the UAE with reduction in the penalties on account of VAT and Excise Tax. The new changes will be applicable from 60 days of its issuance.
The new structure of tax penalty has been introduced to encourage the early submission of voluntary disclosures.
You can access the Cabinet Resolution No. (49) of 2021, here
The FTA also published two new Public Clarifications related to the updated tax penalties in the UAE.
Amendment of Penalties - TAXP001
TAXP001 provides an overview of the amended penalties, and the new mechanism explained for specific penalties.
The document provides several examples of how the new penalties would be applied in practice.
For more clarification you can download TAXP001 from here
Redetermination of administrative penalties levied prior to the effective date of cabinet decision No. 49 of 2021 - TAXP002
TAXP002 provides detailed information on the redetermination of some of the penalties that imposed before 28th April 2021, with practical examples.
For more clarification you can download TAXP002 from here
Conditions to apply for a reduction or exemption of tax penalties
On 26 may 2021, The FTA issued a press release stating that any person or group has the right to apply for a reduction or exemption for Tax Law violation penalties imposed under the tax legislation, , provided that there is an excuse acceptable to the FTA, which is supported by evidence that justifies the existence of the excuse and the violation that led to the imposition of administrative penalties.
To submit such a request to the FTA to reduce or exempt from the penalties imposed by the FTA, the following conditions should be met:
The FTA would notify the applicant of the decision within 10 business days from the date of issuance.
To access the FTA press release, visit
New amendment relating to VAT recovery of the new residence for UAE nationals
The FTA has amended Clause (3) of Article (66) of the VAT Executive Regulation, with Cabinet Decision No. 24 of 2021.
The new clause changed the time limit for UAE nationals to submit their new residence special refund application from 6 months to 12 months from the date of completion of the newly built residence.
According to this change, the FTA has published an updated version of the real estate guide which modifies the time limit from 6 to 12 months.
To access the amended VAT Executive Regulations, click here | To access the updated VAT real estate guide, click here.
Basic tax information bulletin for the automotive sector
The FTA has published a new basic tax information bulletin for the automotive sector clarifying the following:
Repair services and parts provided under warranty
VAT is applicable in the first instance on:
- Sale of vehicles that include warranty
- Warranty packages purchased separately by the customer
Any subsequent supply of repair services and parts under warranty claims is not subject to VAT separately as long as no other amount is paid.
Repair and maintenance services
Where repair and maintenance services are physically provided in the UAE in relation to motor vehicles, such services are subject to VAT at the standard rate, even if the costs are charged to an entity based outside the UAE.
You can access the basic tax information bulletin, here.
Egypt
Paper invoices are not accepted for deducting or refunding VAT from January 2022
On 10th March 2021, The Egyptian Tax Authority (ETA) announced that with effect from 1st January 2022, paper invoices will no longer be accepted for deducting or refunding VAT.
The Minister of Finance issued a decision to add a new paragraph to Article 38 of the Executive Regulations for the VAT Law which states that only electronically issued invoices (e-invoices) will be accepted, with the exception of invoices issued before the obligation to implement the e-invoices system and invoices issued by companies that ETA has exempted from e-invoicing.
E-invoicing implementation timeline in Egypt:
You can access the latest announcement from the ETA, here.