Keypoint TaxFlash | 10 November 2022

TaxFlash has been designed to keep our clients and contacts up-to-date with relevant tax developments. Please contact the Keypoint tax team if you have any questions about anything covered in this TaxFlash. Click here if you'd like to be added to our mailing list.

Bahrain:

The Ministry of Industry and Commerce (MoIC) has issued an official letter to MOIC-regulated entities confirming that the deadline for submission of economic substance (ES) returns for FY 2021 is 11 November 2022 (tomorrow).
The Chief of Customs recently visited the new Bahrain International Center for exhibitions and conferences.
Bahrain’s Customs Affairs recently celebrated World Quality Day under the slogan of ‘Do the right thing’.

Saudi Arabia:

The Zakat, Tax and Customs Authority (ZATCA) concluded its participation in the Seamless Saudi Arabia conference and exhibition.
ZATCA has announced that the urgent operation of the empty quarter’s port won its best transformation project award for 2022.
ZATCA carried out more than 11,000 inspections during October 2022.
ZATCA thwarted an attempt to smuggle more than 3.2m Captagon pills through Jeddah Islamic Port.
ZATCA is hosting virtual workshops on interpretative decisions (in Arabic) on 13 November 2022 and Saudi authorized economic operator s (in Arabic) on 14 November 2022.
ZATCA has issued controls to collect storage fees for goods received through land customs ports or goods in transit.

The OECD has published a peer review on Kuwait’s exchange of information on request.

The Organisation for Economic Cooperation and Development (OECD) has released its second progress report on administration and tax certainty aspects of amount A of Pillar One for public consultation.

Our tax leaders - in conjunction with the Eastern Province's chapter of the Institute of Management Accountants (IMA) - will be discussing the future of tax in Saudi Arabia, the second phase of ZATCA's fatoorah project, transfer pricing in Saudi Arabia and tax controversies at the KFUPM Business School (KBS) at Dhahran TechnoValley on Monday 5 December. Join us for some interesting, timely conversations - as well as networking with old and new friends! More details to follow!

Technical tip | Bahrain

Fair market value

From a Bahrain VAT perspective, the value of a supply is generally determined by the agreed consideration between a supplier and its customer. However, there are instances where the value of a supply is determined according to fair market value (FMV), including:

Supplies made between related persons where the value of supply is less than the FMV and the customer is not entitled to deduct the input tax in full: value should be based on the FMV of the supplier’s good or service
Supplies made in return for a non-monetary consideration: value should be based on the FMV of the non-monetary consideration

Determining the fair market value is not always straightforward, and an estimation may be required in accordance with the methodologies set out in the guidelines issued by the Organization for Economic Cooperation and Development (OECD).

Documenting the basis of that calculation is critical as the NBR may challenge the valuation and issue an assessment for additional output VAT if it rules the fair market value should have been higher.

If you have any questions regarding fair market values for VAT purposes, contact Keypoint’s tax team

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.

TaxFlash 10 November 2022

Technical tip | Bahrain

TaxFlash
10 November 2022