The United Arab Emirates (UAE) introduced the Economic Substance Regulations (ESR) in April 2019 to be excluded from the EU’s COCG grey list (European Union’s Code of Conduct Group) and not to be classified as a harmful tax jurisdiction by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS).
On 18 October 2020, the Sultanate of Oman published its VAT law. The entry into force of VAT in Oman will be 180 days as of the publication of the Law. It is expected that the Executive Regulations will be published in December 2020 and that registrations will open in January 2021, around three months before the introduction of VAT in the Sultanate. Oman will be the fourth GCC State to introduce VAT, after UAE and KSA on 1 January 2018, and Bahrain on 1 January 2019. Qatar is expected to be next, and Kuwait the last (if ever).
Learn all about KSA’s First Free Zone and the applicable tax regime
The three GCC countries which have introduced VAT so far, UAE, KSA and Bahrain, have based themselves on the GCC VAT Treaty to draft their laws. The next country to do so, Oman, has done the same.
There is a special group of VAT payers, which fulfill a particular role as stakeholders in the VAT system. They sit on the fringes of the VAT system, not being a full on taxable person, and neither simply a payer, like private persons would be.
In the EU, this special group is sometimes called the “group of four”, or the “persons benefiting from a special regime”. These are the non taxable legal persons, the exempt tax payers, the small business and the farmers.
Together with the capital assets scheme, it is one of the more technical matters in VAT, and its status under GCC VAT is lacking clarification. Below, we explore the status of the non taxable legal persons. In the upcoming articles, we will be covering the other categories of special taxable persons in the GCC, which are listed below. Going forward we will refer to them as “special tax payers”.
With increasing globalization and the ease of conducting international financial transactions, the G20 countries requested the OECD to develop a transparent system that would allow jurisdictions to combat off-shore tax evasion and non-compliance effectively. Although exchange of information was not a foreign concept, CRS is one example of an international evolution towards automatic exchange of information (AEOI) based on pre-defined formats. Another such an example is country by country reporting.
Drawing inspiration from the Foreign Account Tax Compliance Act (FATCA) in the USA, the OECD Council approved the Common Reporting Standards (“CRS”) in 2014, enabling the automatic exchange of financial information between jurisdictions.
Do not miss our webinar covering the year 2020 in review from a GCC tax perspective.
Attend our webinar on 18 January and make sure you are up to date with every single tax development in the GCC.
Are you afraid you missed the KSA guides and Circulars? That you missed the Clarifications in the UAE? Did you miss the Omani TP updates? Did you not review the changes in the KSA income tax law?
We will cover all important 2020 updates across the GCC and across all taxes. We will also cover our expectations in terms of the 2021 changes.
The webinar is a must attend for any in-house tax person.
Registration via lovely@aurifer.tax. Seats are limited!
The United Arab Emirates (UAE) is a tax friendly country, imposing no personal income tax and no federal corporate income tax. Nevertheless, it has recently introduced a set of new tax driven disclosure requirements which have significantly increased the level of transparency for individuals and multinational groups with operations in the country.
Now that the UAE MoF has opened the portal, let’s have a look at how we can file the ESR notification and report.
Few events in the last decade have contributed as much to the growth of the digital economy as Covid-19. The pandemic forced entire populations to go into lockdown, working from home became the norm and outdoor activities were limited to a bare minimum out of fear of infection. All these factors have contributed to a change in consumer behavior as a result of an increase in screen time, which has in turn significantly increased our exposure to digital advertisements. To no one’s surprise, electronic platforms and digital marketplaces have reported an enormous surge in online engagement due to people massively ordering goods and services via the internet. At a time where large numbers of brick-and-mortar stores are experiencing a serious economic slowdown, the e-commerce sector in the GCC is set to reach a value of over $24 billion by the end of 2020, a figure which is $3 billion higher than the projected value of $21 billion (of which more than $2 billion is reportedly due to Covid-19)[1]. It is against the background of a thriving e-commerce sector that we will have a closer look at the applicable VAT rules for electronic services in the GCC [2]. This article does not consider supplies of goods, which are subject to an even more complicated regime in the GCC.
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