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TaxFlash
11 August 2022

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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
  • National Bureau for Revenue (NBR) representatives continue to work with teams from the Ministry of Industry and Commerce (MoIC), inspecting shops and commercial establishments to check VAT is being applied correctly.
  • According to ministerial order 106 of 2018, any MoIC-regulated entity that carried out a ‘relevant activity’ in Bahrain in FY2021 should have submitted an economic substance (ES) return using the NBR’s international tax information exchange system (ITIES) portal by 31 March 2022. We understand that the deadline has been extended to mid-August 2022 although an official circular is yet to be published by the MoIC. For support with completing and submitting your ES return, contact Keypoint’s tax team.
  • The NBR is hosting a virtual workshop on 29 August 2022 to discuss VAT basic concepts and filing process.
  • Bahrain Customs published the new form of the certificate of origin for national products of the co-operation council of Arab states as the old model will be discontinued.
  • Bahrain customs thwarts an attempt to smuggle illegal drugs through the airport.
Saudi Arabia 
  • The Zakat, Tax and Customs Authority (ZATCA) announced its services in the passenger section of the new Salwa port which connects the Kingdom with Qatar.
  • ZATCA has established the "Team Building" program as part of the Cultural Integration Project initiatives.
  • ZATCA signed a cooperation agreement with Saudi Arabia Company (‘SATS’) to assist with air freight at the customs of King Abdulaziz International Airport and King Khalid International Airport.
  • Excise returns for July 2022 should be submitted by 15 August 2022.
  • ZATCA is hosting virtual workshops on the zakat treatment for taxpayers working in agriculture, nutrition and hospitality on 17 August 2022 and treatment of zakat investment on 24 August 2022.
  • ZATCA has introduced an ‘instalment plan’ for Zakat or tax due under the Exemption of Penalties Initiative (Amnesty Scheme).
UAE
Oman
  • The Oman tax authority (OTA) has published key dates for applying the special stamp system on cigarettes.
Qatar
  • The GTA has shared a video on how to report tax evasion cases via the Dhareeba portal.
Kuwait and beyond the GCC
  • No updates this week.
 Technical tip | Bahrain
Place most closely connected with a supply

When providing services to a non-resident customer, the VAT-registered supplier in Bahrain must consider specific conditions to assess its eligibility to apply VAT at zero-rate on the supply. One such condition focuses on identifying the ‘customer’ in the supply and establishing their location.

While establishing the customer’s location, the supplier must pay special attention to cases where the customer has multiple places of residence for VAT purposes – including a place of residence in Bahrain (such as a Bahraini branch) – as this may challenge the supplier’s entitlement to apply Bahrain VAT at the zero-rate. The National Bureau for Revenue (‘NBR’) has clarified that, in such cases, the customer’s location is assessed based on the place of residence that is most closely connected with the supply of the relevant services. To determine which establishment is most closely connected with a supply, the supplier must consider factors which depend on the nature of work undertaken and extent of involvement of each establishment, party appearing on the contracts and invoices, etc. The NBR has elaborated these factors with examples in the VAT General Guide. Needless to say, the supplier must maintain proper evidence of this assessment to justify the VAT rate applied.

If you are a GCC taxpayer requiring assistance with determining the place most closely connected with a supply, contact Keypoint’s tax team.

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© 2022 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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