Your tax advisers in the Middle East

We are Aurifer. We are a boutique
tax firm established in Dubai.

Our highly skilled and well-trained advisers guide you through your fiscal obligations in the Gulf.
We are your personal pragmatic partner in all of your ventures. Our international tax experience in policy and
implementation is exactly what you need for the changes lying ahead.
We exist to guide businesses and governments through assessing the impact of new VAT legislation and provide strategic tax advice to address any issues, seize possible opportunities. Together we determine your tax strategy and processes to ensure compliance and keep your financial edge. This may entail important changes to your corporate strategies and structure, such as merging, demerging or divesting some of your assets. In order to determine the impact we need to not only analyze your income but also all of your purchases and expenditure.
Our comprehensive analyses examine the impact on your organizational processes as well as the finance, IT and logistics department, HR, marketing and sales.

Aurifer assists in tax controversies with the tax administration. We guide you through initial stages of securing tax treatment through agreements with the tax authorities, through administrative controversies after an audit, and finally before the courts through our partnership with renowned law firms.
Traditionally, businesses in the Gulf have had some experience with corporate income tax, especially with respect to their foreign investments. Our experts guide you through questions around tax residency, analyzing how double income tax treaties apply to your structure and transfer pricing requirements.

The experts of Aurifer are also available for short term projects to assist clients more closely with particular tax transformation projects.

Who we serve

The introduction of Value-Added Tax in the Gulf triggers a need
for governments and businesses to understand the implications to their organization.

The advisers

Thomas Vanhee
Founding Partner
Roberto Scalia
Of Counsel

We provide tax training

At Aurifer, we pride ourselves on our training skills. Our experts have extensive training experience in multiple jurisdictions, having provided training both to professionals and on an academic level. We provide general and sector specific training.

Training Overview


Bahrain third GCC country kicking of VAT

Bahrain third GCC country kicking of VAT

20190102 by Thomas Vanhee, Ouarda El Ghannouti
Following the publication of the VAT legislation in Bahrain and the start of a new year, VAT has now become a reality in Bahrain. Bahrain is the third GCC country introducing VAT and the National Bureau of Taxation (“NBT”) will be policing it. In this article we will touch upon the most interesting and striking parts of the VAT legislation.

Bahrain third GCC country kicking of VAT

Bahrain third GCC country kicking of VAT
20190102 by Thomas Vanhee, Ouarda El Ghannouti

Following the publication of the VAT legislation in Bahrain and the start of a new year, VAT has now become a reality in Bahrain. Bahrain is the third GCC country introducing VAT and the National Bureau of Taxation (“NBT”) will be policing it. In this article we will touch upon the most interesting and striking parts of the VAT legislation.

Real estate

Unlike the UAE and KSA, the Bahraini VAT legislation provides for an exemption for the supply or lease of both residential and commercial buildings. Bahrain is the first GCC country that implements a VAT exemption for the supply and lease of commercial buildings. The exemption may have far reaching consequences for the real estate market.

Furthermore, a zero rate is applicable on construction services related to new buildings (residential and industrial). Goods supplied by a business that supplies construction services and which are supplied in the course of providing construction services for a new building, are also zero rated. This includes for instance building materials and materials necessary to construct specialised raised flooring for computer server rooms. 

However, goods like furniture that is not affixed to the building, swimming pools and decorative lighting, paintings, carpets and murals and other artwork are not zero rated.

The zero rate is also not applicable on restoration works, demolition of existing buildings and architects and interior design fees. VAT incurred on these purchases will therefore constitute a cost for businesses who want to sell or lease their new constructed building.

Food items

Bahrain implemented the optional provision in the GCC VAT Agreement and applies a zero rate on the supply and import of certain basic food items. Bahrain is again the first GCC country doing this. The Bahraini Tax Authority published the list with zero rated items, indicating that 94 types of food will fall under this special rule. The list includes ten categories:

  1. Meat and fish 
  2. Fruits and vegetables 
  3. Coffee, tea and cardamom
  4. Wheat and rices
  5. Sugar
  6. Children’s food
  7. Water
  8. Salt
  9. Egg products
  10. Bread

Note that the supply of food by restaurants, coffee shops or caterers will still be subject to the standard rate. There is a great deal of conflict expected around the interpretation of mixed supplies which include a zero rated part, or between take in and take out products.

Financial services 

Bahrain has taken an unoriginal position in line with KSA and UAE. Financial services are exempt from VAT, except where the consideration for the service is expressly determined as a fee, commission or commercial discount. Financial services are defined as services related to cash transactions in the VAT Executive Regulations. 

Additionally the regulations also include a list with examples of financial services that are exempt (e.g. depositing money in current accounts, savings accounts or deposits, granting and transferring loans, borrowings and credit, issue or cancellation of cheques, debit cards and credit cards). 

Some services like the issue, allotment, or transfer of ownership of an equity security or debt security and life insurance and reinsurance contracts, will be exempt, irrespective of how the consideration for them is payable.

Furthermore the supply of financial services to non-residents will be zero rated.

In case the financial institution supplies services which do not fall under the VAT exemption nor the zero rate, the standard rate will have to be charged. Consequently the financial institutions will have to issue compliant invoices. In this regard the regulations clarify that a bank statement shall be treated as a tax invoice provided it contains certain information like the name, address and registration number of the bank in the Kingdom and the name and address of the customer.

Transport services

Similar to the UAE and KSA, in Bahrain a zero rate is applicable on the international transport services of goods which begin in, end or pass through its territory, including services and the supply of related means of transport. The zero rate is also applicable on the supply of services and goods directly or indirectly associated with the international transport of passengers and goods, including goods and services supplied for use or consumption on board a means of transport.

A zero rate is also applicable on the local transport services of goods and passengers by land, water or air. Exceptions apply, i.e. the standard VAT rate is applicable in the following five cases:

  1. Transport services provided by a person who does not meet any regulatory or licensing requirements from the authorised body to provide such services,
  2. Services of vehicle rental without a driver, 
  3. Transport services for sightseeing or leisure purposes,
  4. Food delivery services provided by a person supplying food,
  5. A transport service which is ancillary to the principal supply of goods or services which is taxable at the standard rate, and is not priced separately to the supply of a good.



By default, VAT on imported goods will be payable to Bahrain’s customs authority prior to the release of the goods. The tax authority may allow the deferral of payment of VAT on import if the importer is registered for Tax purposes and if the Taxable Person is bound by Customs Affairs records at the Ministry of Interior.

Further details are expected soon. The import VAT deferral mechanism should be implemented by the end of Q1 2019.


Non-resident suppliers supplying services which are taxable in Bahrain to Bahraini customers, will have to account for the VAT themselves unless the customers are registered taxable persons. In that case the Bahraini recipient will have to account for the VAT himself under the reverse charge mechanism.



The export of goods and services are zero rated, provided that certain conditions are met (e.g.). Exporters who are primarily engaged in making exports can apply for a domestic reverse charge on certain purchases that are subject to the standard rate and received from taxable persons in Bahrain, allowing them to benefit from cashflow advantages. This burdensome procedure is also used in France but the French authorities have to spend important resources in policing it.

In order to get the approval from the NBT to apply the reverse charge mechanism, the taxable person should be able to fully recover any input VAT, export more than 50% of its turnover, show that he will be in a refund position on a recurring basis and that the refund will have a material impact on his financial position.


So-called “exports of services” (a term absent in the GCC treaty) supplied by a taxable person in Bahrain are subject to the zero rate if certain conditions are met. For instance the services should be supplied to a person who does not have a place of residence in Bahrain and who was outside Bahrain when the services were provided. The services should be performed and enjoyed outside the country and should also relate to tangible goods or real estate located outside the country. It remains to be seen whether the NBT will take an equally very restrictive view like its KSA counterpart.

Telecommunication and electronic services

Telecommunications and electronic services supplied to a non-registered customer shall be taxable at the place of use and enjoyment of the services on the date of supply. Supplies made to taxable customers will be taxed at the place of residence of the customer. 

The regulations provide some further information on the determination of the place of use and enjoyment as well as how to determine the place of residence of a customer who is a taxable person.

UAE VAT for foreign businesses

UAE VAT for foreign businesses

20181230 by Thomas Vanhee, Thais Cunha, Melissa D'Souza

UAE VAT for foreign businesses

UAE VAT for foreign businesses
20181230 by Thomas Vanhee, Thais Cunha, Melissa D'Souza

With the influx of more than 25 million visitors expected from around 190 countries for Expo 2020, the UAE FTA has implemented two special VAT refund mechanisms to ensure that business visitors do not incur any VAT.

The first mechanism targets exhibitions and conferences attended by international businesses. The second one benefits business visitors who will be able to claim the refund of VAT paid on expenses incurred in UAE. Below the two mechanisms are discussed.

VAT refund for exhibitions and conferences

The VAT refund for exhibitions and conferences is beneficial for the organizers as well as the business visitors attending such events in the UAE.

This scheme enables both suppliers and their international customers to save 5% VAT payment on selected services. This particular refund mechanism covers services such as the rental of exhibition space or access to exhibitions and conferences.

Only international customers, those who are not established in the UAE or are not registered for VAT purposes in the country, can avail this benefit. The international customer must inform the supplier that the business is not resident in any manner or registered in the UAE for VAT purposes.

The supplier, on the other hand, needs to be registered for VAT purposes in the UAE, as well as inform the FTA before the event takes place to be able to grant this benefit to its international customers.

Once registered, the conference and exhibition supplier should issue an invoice with VAT but not collect VAT on the relevant exhibition or conference services from their customers. Instead, he claims the VAT refund equal to the output VAT charged on the subsequent VAT return. 

Since the payment of this VAT will de be deferred to the VAT return and compensated with a simultaneous deduction in the same return, it does not impact the supplier’s cash flow, while also providing the customers with immediate VAT refund.

Refund for business visitors

Similar to the business VAT refund scheme available in the European Union, the UAE has implemented a scheme whereby all VAT costs incurred by a non-resident business which are not registered for VAT in the UAE, are reimbursable through the VAT refund mechanism for business visitors.

Some of the most common expenses by non-residents include the local purchase of goods, employee travel and lodging, training, service charges for vendors and others. It is important to note that the VAT reclaimed must be directly related to the business activities and cannot be for entertainment or any other legally blocked expense, which are specifically excluded from all input VAT recovery.

Foreign business will only be entitled to claim a VAT refund in case they are from a country that has VAT and also provides refunds of VAT to UAE entities in similar circumstances. KSA currently does not provide this refund to UAE businesses. Therefore, the UAE will also not refund businesses from KSA.

The minimum amount of each application for refund of tax is AED 2,000 which may be the amount of single or multiple purchases. The application should be submitted by a calendar year. The FTA will start receiving claims in respect of VAT incurred in 2018 as from April 2019. The opening date for refund applications in subsequent calendar years will be 1st March.

The FTA will soon release further guidance concerning the exact process for claiming the VAT refund. However, it is expected that businesses will have to provide the original tax invoices for which they intend to reclaim the VAT as part of the application.

VAT obligations for non-resident business

Conferences and exhibitions generate significant opportunities for businesses to show their products and close some deals. 

However, non-resident businesses who intend to sell goods or provide services during a conference or exhibition in the UAE might need to assess their VAT obligations in the country. For non established businesses, the obligation to register for VAT purposes with the FTA arises from the first taxable supply. 

Importantly, non-resident businesses making taxable supplies in the UAE are not entitled to the business visitor refund scheme or to benefit from the VAT refund for exhibitions and conferences.

Overall, these guidelines will not only put UAE top of the list for the hosting of conferences and exhibitions, but it also encourages conference and exhibitions providers, as well as international customers to organize and attend such events in the UAE.

KSA releases draft Transfer Pricing regulations for consultation

KSA releases draft Transfer Pricing regulations for consultation

20181224 by Laurent Bertin and Thomas Vanhee
The first detailed and comprehensive Transfer Pricing (TP) rules were designed in the 1990’s. The US published regulations in 1994 and the OECD published guidelines in 1995. Early 2010’s, following the financial crisis and the multiple tax controveries, such as the Panama papers and LuxLeak, the BEPS initiative was launched by the OECD and the G20. The BEPS initiative is a set of international recommendations is meant to prevent Base Erosion and Profit Shifting (international tax avoidance). As part of the BEPS initiative, TP rules were put on the agenda worldwide as a means to avoid tax evasion.

KSA releases draft Transfer Pricing regulations for consultation

KSA releases draft Transfer Pricing regulations for consultation
20181224 by Laurent Bertin and Thomas Vanhee

Early 2010’s, following the financial crisis and multiple tax scandals, such as the Panama papers and LuxLeaks, the BEPS initiative was launched by the OECD and the G20. The BEPS initiative is a set of international recommendations meant to prevent Base Erosion and Profit Shifting (international tax avoidance).

As part of the BEPS initiative, Transfer Pricing (TP) rules were put on the agenda worldwide as a means to avoid tax evasion. The first detailed and comprehensive TP rules were designed in the 1990’s. The US published regulations in 1994 and the OECD published guidelines in 1995.

Saudi Arabia is member of the G20 and was expected to adopt a comprehensive set of rules to tackle tax avoidance through transfer pricing rules. Recently, it published draft By-Laws on Transfer Pricing. This draft remains available for public comments till 9 January 2019.

KSA’s Income Tax Law had already implemented general anti-TP avoidance measures and approved the arm’s length principle, similar to other GCC Member States. However, these new By-Laws are going a lot further in terms of defining the applicable transfer pricing principles and documentary requirements. The new obligations trigger important compliance obligations and require extensive preparation.  

What is a transfer price?

A transfer price is the price agreed between entities of a same group for their internal transactions (‘controlled transactions’). It targets the relocation of profit within the Group: one entity located in a tax haven invoices its supplies (services or goods) at an artificially high price to another entity located in a high tax jurisdiction, successfully decreasing its taxable base.

In order to avoid this artificial profit shifting, the transfer price is required to comply with the arm’s length principle. This principle requests that the controlled transaction price is determined as if the transactions were made between unrelated parties.

What’s new?

The draft determines the applicable methods and documentation inspired directly by the OECD guidelines and BEPS reports.

Transfer Pricing Methods

KSA has approved the 5 OECD transfer pricing methods:

  1. Comparable Uncontrolled Price Method
  2. Resale Price Method 
  3. Cost Plus Method 
  4. Transactional Net Margin Method 
  5. Transactional Profit Split Method 

A transfer pricing method other than the ones above can be adopted, provided the taxable person can prove that none of those methods provides a reliable measure of an arm’s-length result.


In line with the OECD recommendations, KSA requires:
  • A Master File and Local File to detail the Group and entities' transfer pricing policy (notably an explanation of the applied transfer pricing method) to be prepared on an annual basis at the time of the income tax declaration (only for MNE Group with an aggregate arm’s length value of controlled transactions exceeding SAR 6,000,000 during any 12 month period);
  • The Country by Country Report (CbCR) to be submitted no later than 12 months after the end of the concerned reporting year for MNE groups with a consolidated turnover of more than SAR 3.2 billion.

In addition, it requires a 'Controlled Transaction Disclosure Form’ to be submitted on an annual basis along with the income tax declaration (no threshold applies).

The draft By-Laws draft do not mention the language in which the documentation is to be maintained and filed. However, since the documents are to be submitted together with the income tax declaration, it is likely that TP documentation will have to be in Arabic as well.

It is important to note that these obligations are already applicable to fiscal years ending on 31 December 2018. This implies that the concerned companies must start preparing the required documentation. The latter must be ready within 120 days following the end of the fiscal year, i.e. by the end of April 2019 for the first concerned MNEs.


The draft contains certain exceptions for maintaining the Local file and the Master file. Are exempted from these obligations:

  • Natural persons;
  • Small Size Enterprises;
  • Legal persons who do not enter into Controlled Transactions, or who are a party to Controlled Transactions where the aggregate arm’s-length value does not exceed SAR 6,000,000 during any 12 month period.


Where the price is not at arm’s length, GAZT can adjust the tax base accordingly. This can result in a higher tax liability if part of a tax deduction is rejected or if it considered that the KSA entity should have charged a higher price to its foreign affiliate.

GAZT can also be informed of any TP adjustments made in another country, on a controlled transaction made with a KSA resident, if a treaty is in place with this country. GAZT can ensure the changes by the foreign authority are in line with the arm’s length principle. GAZT can subsequently make the appropriate adjustment to take into account the increase in the taxable base by the foreign tax authority.

In case GAZT disagrees with the adjustment, it can communicate and discuss with the respective foreign authority. An existing mutual agreement procedure ('MAP') with the foreign authority will be necessary.

Advance Pricing Agreements

An APA can safeguard companies against tax reassessments, as it provides for an agreed transfer price by the Tax Authority regarding specific transactions.

The draft By-Laws do not currently provide for an Advance Pricing Agreements (APA) procedure. We may expect some guidelines from GAZT concerning this matter.

Tax Audit and penalties

GAZT has been working on TP for many years and is well prepared to enforce the new TP requirements. A specific tax unit, with experienced auditors, has been created to guarantee the correct implementation of these laws.

The draft By-Laws do not foresee penalties in case of non-compliance. However, it is highly likely that the common penalties relating to corporate income tax would apply. We expect more guidelines soon.

Impact on the GCC

Any GCC company performing controlled transactions with a KSA company will have to comply with the KSA TP rules. The valuation of its intra-group sales must comply with the valuation methods recommended by the KSA TP rules. 

In addition, GCC affiliates with a KSA headquarter will have to prepare a local file describing their own transfer pricing policy for the transactions with their KSA related parties. Important accounting information will also have to be gathered and transmitted to the KSA headquarter to be compiled in the CbCR. 

Concerned entities must start to plan immediately. Practically this does not only encompass preparing the documentation. Companies must also keep evidence of the invoiced work, especially when intangible (e.g. management fees might be requested to be evidenced by proof of rendered services: announcements of internal seminars, memoranda, presentations, emails…). This implies to retain all data regarding intra-group transactions and to draft and maintain the required documentation or information and keep it up to date.

Finally, these new KSA By-Laws open the door to the implementation of TP rules in the other GCC countries, and notably in the UAE. The UAE committed to introducing a CbCR by joining the BEPS Inclusive Framework earlier this year.

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About these books
Aurifer's employees are published authors. Order any of the above publications through our office. Please note that some publications may not be in English, but instead are in French or Dutch. More publications are to follow shortly.