Will zero-rated supplies count for the registration threshold?

Yes, the taxable supplies including zero-rated supplies count for the registration threshold. However, note that it might be possible that some GCC member states will allow, under certain conditions, a company which only makes zero-rated supplies to be excluded from the mandatory registration on request. The UAE and KSA have indicated that they may allow such exclusions in certain cases.

Source: Deloitte

Which countries will implement VAT on 1 January ?

The issue of local laws in the KSA and United Arab Emirates (UAE) confirms earlier announcements by these countries that VAT will be introduced domestically in January 2018. It is unclear when the rest of the countries will implement currently but this is expected to progressively happen through 2018.

Source: Deloitte

Do you think that there will be much variance in application of the rules between member states?

There will be a level of variance in application of the rules across the GCC member states. Similar to the EU, there are some provisions which are compulsory, and others which are optional, and others where there is a choice to be made on treatment at a local level. How each member state approaches the implementation of these provisions is likely to depend on their individual policy settings, economy, etc.

Source: Deloitte

Can we ‘VAT group’ establishments in different GCC states?

We do not expect that it will be possible to ‘VAT group’ entities across GCC member states (e.g. grouping a KSA and a UAE entity), however, we do expect the majority of member states to adopt local VAT grouping provisions as best practice.

Source: Deloitte

Which supplies will be subject to standard rate?

The standard rate of 5% VAT will be applied across all six of the countries. This is expected to apply to substantially all of the domestic supplies made in the normal course of business.

Source: Deloitte

How to apply for VAT De-Registration?

Applications for de-registration will be submitted through the GAZT e-portal once available. The taxpayer will be required to attach documents to evidence their eligibility to de-register.

What is VAT De-Registration?

A registered taxpayer who was eligible for VAT in the past but is no longer eligible, as per the regulations specified under Article 13 of the draft implementing regulations, should apply for de-registration. After a successful deregistration application, VAT taxpayer will no longer be liable to submit his future VAT returns. However, he must fulfill his existing filing obligation and pay outstanding liabilities.

How to file VAT Returns?

Taxable persons will need to file the VAT Return through the GAZT e-portal once available.

The VAT return form will require you to provide various details about your business during the tax period:

  • Standard rated domestic sales
  • Sales to registered customers in other GCC states
  • Zero-rated domestic sales
  • Zero-rated exports
  • Exempt sales
  • Standard rated domestic purchases
  • Imports subject to VAT paid at customs
  • Imports subject to VAT accounted for through the reverse charge mechanism
  • Zero-rated purchases
  • Exempt purchases
  • Corrections from previous period (up to 5,000 SAR)

You will also need to specify any relevant adjustments.

Note that for corrections (due to an error or omission) of more than 5,000 SAR, the taxpayer will need to complete a voluntary disclosure form.

Where the taxable person fails to file the VAT Return within the prescribed period, GAZT may make an assessment of the tax.

What is VAT Return?

A VAT eligible taxpayer pays VAT on his taxable purchases and collects VAT on his taxable supplies.

In essence, the taxpayer is collecting VAT on behalf of the General Authority of Zakat and Tax (GAZT) and has the right to claim back VAT paid on his taxable purchases.

Taxpayers will be required to file their returns to provide details of transactions related to taxable supplies and purchasesFollowing the submission of VAT return form, taxpayers will be asked to either pay the VAT liability or may claim back VAT refund depending on their situation. This set of activities is commonly referred to as VAT return filing.

GAZT has the right to issue a new assessment which adjusts a prior assessment, providing formal notice to the taxable person.

What happens of an invoice is issued before VAT implementation and delivery happens after the implementation?

In such a scenario, according to Article 21, if an invoice is issued or payment is done before the implementation of VAT but the goods are delivered after the implementation date, then the VAT will be considered due.