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TaxFlash
 8 July 2021

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This TaxFlash has been designed to keep our valued clients up-to-date with relevant tax developments. Please contact the Keypoint tax team if you have any questions about this TaxFlash. Click here if you'd like to be added to our mailing list.
Bahrain
  • Monthly (June 2021) and quarterly (Q2 2021) VAT returns should be submitted and paid by 1 August 2021.
  • According to the ITIES portal, the NBR has extended its deadline to file ES returns for MOICT-regulated entities until 31 August 2021. We continue to await clarification on the deadline for CBB-regulated entities. While the modified ES report template is still not available on the ITIES portal, we have been informed by the NBR that it will be available in due course.
  • Bahrain’s tax authority, the NBR, has successfully migrated its core systems from AWS Ireland to AWS servers in Bahrain.
Saudi Arabia
  • Monthly (June 2021) and quarterly (Q2 2021) tax returns should be submitted and paid by 31 July 2021.
  • Transitional VAT rules for the application of a standard rate of 5% on certain supplies ended on 30 June 2021. All Saudi taxpayers should be applying VAT at 15% on all standard-rated sales made from 1 July 2021, unless further changes are announced by ZATCA.
  • ZATCA has outlined three steps to help taxpayers to comply with the requirements of the first phase of e-invoicing – generation from 4 December 2021. A reminder that a recording of our TaxMatters special on e-invoicing is available here.
  • ZATCA has revamped the e-invoicing section of its portal.
  • Taxpayers subject to withholding tax should submit their returns for June 2021 by 10 July 2021 to avoid penalties.
  • On 2 July 2021, ZATCA issued ministerial decree 3852 outlining rules of origin for goods imported into Saudi Arabia.
Oman
  • VAT in Oman went live on 1 July 2021 for taxpayers with annual taxable supplies of OMR500,000-OMR1,000,000. Taxpayers with annual taxable supplies of OMR250,000-OMR499,999 should apply for registration before 31 August 2021 for an effective date of 1 October 2021.
  • The Oman Tax Authority (OTA) recently published a VAT return checklist.
  • The OTA has stressed the importance of submitting VAT returns on time to avoid penalties.
  • The OTA has suspended the implementation of local CbC filing requirements until further notice.
UAE
  • The Federal Tax Authority (FTA) recently issued VAT guidelines for the automotive sector – see our technical tip for an interesting difference between how the UAE and Bahrain are treating reimbursement for warranty repairs.
  • The Ministry of Finance has published  mutual agreement procedures.
  • Monthly and quarterly tax returns should be submitted and paid by 28 July 2021.
Qatar
  • Qatar’s General Tax Authority has announced that eligible companies can submit simplified tax returns through Dhareeba, its online tax portal.
Kuwait
  • No updates this week.
 Technical tip | GCC
Warranty claims
 
The UAE’s Federal Tax Authority (FTA) recently published an automotive sector guide. One key aspect that is highlighted in the guide is the VAT treatment of warranties and warranty claims. As in Bahrain and Saudi Arabia, the FTA has clarified that no separate supply of warranty takes place, on the taxable sale of a ‘warrantied’ vehicle, and no additional VAT is chargeable to the vehicle purchaser on the performance of repair services under the warranty. Extended warranties provided by suppliers separately are taxable at the standard VAT rate (as long as the supplier is VAT-registered), as a separate supply of services. Input tax incurred in the course of performing warranty repairs is recoverable, as it relates to making taxable supplies – either of taxable vehicles with warranty, or of extended warranties.

Interestingly, the FTA has clarified that reimbursement of repair costs by overseas manufacturers to UAE-based distributors carrying out warranty repairs are VAT-able at 5%. In the FTA’s view –  the payment is consideration for a supply of services  made to the overseas principal, in connection to goods situated in the UAE, which attracts the standard rate of VAT. This contrasts with guidance in Bahrain where the NBR has clarified that reimbursements (without any margin) when made to a Bahraini dealer from an overseas manufacturer are outside the scope of VAT. In Bahrain, only the margin (if any) is taxable (as the repairs are related to tangible goods located in Bahrain). In Saudi Arabia, ZATCA has not yet provided detailed VAT guidelines on warranties. While certain aspects of warranty services were covered in the VAT retail industry guide (in Arabic), there has been no clarification regarding the treatment of recoveries from manufacturers.
 
If you have any questions in relation to warranty claims and their treatment, please contact our Keypoint tax team.
Our services

Our recently updated tax services brochure gives you a clear and succinct summary of the current tax landscape in the GCC. Click on the image for more details - or speak to your regular Keypoint contact for more details:

George Campbell
Head of Tax

george.campbell@keypoint.com
+973 3833 8641
+973 1720 6879

Raman Ohri
Head | Direct tax

raman.ohri@keypoint.com
+973 3516 2335
+966 50 286 4266

Tariq Haq
Manager

tariq.haq@keypoint.com 
+973 1710 3480
+973 3628 3351

Dinesh Ravi
Manager

dinesh.ravi@keypoint.com 
+966 13 845 9228
+973 3628 3359

Adil Fawzi
Manager

adil.fawzi@keypoint.com 
+966 13 845 9226

+966 5 3251 0366
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© 2021 KEYPOINT - DISCLAIMER

TaxFlash is intended to provide general updates in relation to tax in the GCC. It is not a substitute for professional advice. You should seek appropriate professional advice from a tax advisor before making any decision relating to your particular circumstances.
 
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