News Update

Can I avoid a Dh22,000 penalty imposed by the FTA?

Date: 16 Apr, 2019

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External URL: https://www.thenational.ae/business/money/vat-q-a-can-i-avoid-a-dh22-000-penalty-imposed-by-the-fta-1.849235

If you fail to file the return the FTA does not recognise any payments that you have made. Therefore you get fined not only a later filing fee but also interest on the amount of the tax due, until the point at which you file the return.

The penalty for missing the filing deadline is Dh1,000 for the first offence and then Dh2,000 for every subsequent missed deadline.

VAT Treatment of Education Services

Date: 15 Apr, 2019

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The supply of educational services and  related goods and services by kindergartens, pre-primary, primary, secondary and higher education institutions is subject to the zero-rate.

In order for the zero-rate to apply:

The school or educational institution must be licensed by the Ministry of Education in Bahrain or be under its supervision, and Supplies must be provided directly to a student who is enrolled in that school or institution.

Certain educational services are not subject to the zero-rate (and will be subject to the 5% rate), including:

Professional education; and Vocational training, unless such  vocational training is provided by a polytechnic educational institution  which is licensed by the Ministry of Education in Bahrain.

 

Read more..

 

VAT Healthcare Guide

Date: 15 Apr, 2019

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An overview of the VAT rules and procedures in relation to the healthcare sector in Bahrain and, if required, how to comply with them the necessary background and guidance to help you to determine how a supply is treated
for VAT purposes.

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Financial Services VAT Guide

Date: 15 Apr, 2019

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This document sets out some of the general principles of Value Added Tax (VAT) in the Kingdom of Bahrain (Bahrain) specifically relevant to the financial services and the insurance sectors. The main aim of this document is to provide the reader with:

An overview of the VAT rules and procedures applicable to the financial services and the insurance sectors in Bahrain and, if required, how to comply with them the necessary background and guidance to help you to determine how a supply is treated for VAT purposes.

 

NBR holds an interactive workshop for representatives working in the manufacturing sector

Date: 10 Apr, 2019

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External URL: https://www.nbr.gov.bh/releases/44

The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the manufacturing sector, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 46 representatives from 24 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organized by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

VAT implementation in focus

Date: 04 Apr, 2019

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External URL: http://www.gdnonline.com/Details/522760/VAT-implementation-in-focus

The Bahrain Chamber of Commerce and Industry (BCCI) represented by its finance, insurance and tax committee, and its technology committee held a workshop themed “Using technology in VAT implementation” at Beit Al Tijjar. The workshop, delivered by experts from KPMG Bahrain, discussed the legal and administrative framework of the tax, the sector-specific guidelines for VAT as per the National Bureau for Revenues, and the challenges of implementing the tax .

VAT Digital Economy Guide

Date: 04 Apr, 2019

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External URL: https://www.newsofbahrain.com/bahrain/52526.html

The National Bureau for Revenue (NBR) has published a guide that mainly focuses on educating the public on the VAT treatment of e-commerce and the VAT treatment of electronic services. ‘The VAT Digital Economy Guide’ aims to educate the public about the application of VAT on e-commerce and electronic services. The document sets out the general principles of Value Added Tax (VAT) in relation to the digital economy sector in the Kingdom.

The main aim of the document is to provide the reader with an overview of the VAT rules and procedures in the Kingdom in relation to the digital economy sector and how to comply with them if required. It also explains the necessary background and guidance to help determine how supply is treated for VAT purposes.

“This guide is intended to provide general information only and contains the current views of the National Bureau for Revenue (NBR) on its subject matter. “No responsibility is assumed for the VAT laws, rules or regulations in the Kingdom. “This guide is not a legally binding document and does not commit the National Bureau for Revenue or any taxpayer in respect of any transaction.

Read more..

FTA begins process for refunding VAT to business visitors

Date: 02 Apr, 2019

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External URL: http://wam.ae/en/details/1395302752645

The Federal Tax Authority, FTA, has begun implementing the Value Added Tax, VAT, refunds for business visitors while noting that a dedicated application form for the procedure is available on its website.

In a press statement issued today, the FTA explained all the procedures with regard to the refund of VAT to business visitors. The FTA also published a guide through its website which can be accessed through the link: Guide – VAT Refunds for Business Visitors.

Khalid Ali Al Bustani, FTA Director-General, said, “Reciprocity is a key condition for the procedure, whereby the authority will collaborate with countries that refund VAT for UAE businesses visiting their territories.

“The procedure abides by Federal Decree-Law No. (8) of 2017 on VAT and its Executive Regulations, which call for refunding taxes on supplies or imports made by a person not residing in the UAE or any of the Implementing States, provided they meet the necessary conditions.”

The FTA clarified that the period of each refund claim shall be a calendar year, noting that for claims in respect of the 2018 calendar year, it started accepting refund applications as of 1st April, 2019. However, in subsequent calendar years, the opening date for refund applications submission will be 1st March of the following year. That means for the period 1st January to 31st December, 2019, applications will be accepted as of 1st March, 2020.

Early registration key to a smooth Bahrain VAT transition

Date: 02 Apr, 2019

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External URL: https://ameinfo.com/money/banking-finance/early-registration-key-to-a-smooth-bahrain-vat-transition/

Bahrain introduced a 5% value-added tax (VAT) in the Kingdom from January 1st, 2019.

The tax registration in the country is split across phases and requires businesses to enrol across each phase based on their threshold. As such, the larger businesses with annual supplies exceeding BHD 5,000,000 ($13.25 million) are mandated to register in the first phase, whereas businesses with the annual supplies value exceeding BHD 500,000 ($1.32 million) are mandated to register in the second phase.

Similarly, businesses whose annual supplies exceeds BHD 37,500 ($99,375) are mandated to register in the third phase. In addition, voluntary VAT registration is available for businesses even if the annual supplies are less than the mandated registration threshold limit. While it is voluntary, and entrepreneurs can register if their annual supplies exceed BHD 18,750 ($49,687) benefits of registering under VAT are immense and it is recommended that businesses that have not yet enrolled, start immediately to assess the impact of tax on their operations.

Upon registering under VAT, businesses are given a VAT number which can be displayed on invoices, letterheads, websites and other forms of business stationery. While early registrations help businesses add VAT to the sale price of goods and services when they sell to commercial and non-commercial consumers, it can also help in claiming the Input VAT – a mechanism by which a VAT registered business can deduct input tax from the output tax for a period and remit the balance tax payable to the National Bureau for Revenue.

VAT is a simple process, and The National Bureau for Revenue (NBR) has introduced several knowledge and process guides to make registration seamless and accurate. As such, with the help of NBR, early registered businesses can prepare well in advance and ensure that the process is completed easily, eliminating the risk for unnecessary delays, and incorrect information, which may lead to hefty fines or rejection.

UAE considers adding more 'harmful' products to excise tax list

Date: 01 Apr, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/416809-uae-considers-adding-more-harmful-products-to-excise-tax-list

The UAE is mulling the inclusion of new products on its excise tax list, according to a statement by the Ministry of Finance, which implemented the fee on three categories in October 2017.

The ministry is conducting a joint study with officials in Saudi Arabia “on the addition of new goods to the selective tax list, as well as to determine tax rates on certain harmful substances,” its statement said.

While it did not share details of the goods it is considering to add to the tax list, it said in 2017 that it aims to reduce the consumption of harmful substances.

These include tobacco and tobacco products and carbonated and energy drinks, which are currently listed under the excise tax and have doubled in price since the fee’s introduction.

Basic food products NOT subject to VAT

Date: 01 Apr, 2019

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External URL: https://s3-eu-west-1.amazonaws.com/nbrproduserdata/media/59sMaZjgMJHhj7hPqKDFwJdaqEMlhyAODPrYOSe3.pdf

Items Not Subject to VAT

 

 

NBR holds an interactive workshop for representatives working

Date: 01 Apr, 2019

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External URL: https://www.nbr.gov.bh/releases/43

The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the construction sector, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 88 representatives from over 50 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organized by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

NBR holds an interactive workshop for representatives working in the construction sector

Date: 01 Apr, 2019

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External URL: https://www.nbr.gov.bh/releases/43

The National Bureau for Revenue (NBR) held an interactive VAT workshop for professionals working in the construction sector, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, 88 representatives from over 50 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organized by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

Introducing Digital Tax Stamps Scheme in the UAE

Date: 01 Apr, 2019

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External URL: https://www.tax.gov.ae/pdf/DTS%20Newsletter_2_Plus_3_en.pdf

IMPORTANT DATES 

1st Jan 2019

Importers will be able to order stamps to be sent to the Manufacturers for application to the pack of cigarette products

1st May 2019

No cigarette products without a digital tax stamp will be permitted to be imported into the UAE. Customs departments will undertake checks on
products from this date and penalties for non-compliance may apply.

1st August 2019

No cigarettes will be allowed to be stored, held out for sale, imported or produced anywhere in the UAE unless they carry a Digital Tax Stamp with
end-to-end traceability. Penalties for non-compliance with this rule may apply. It would therefore be advisable for businesses to consider this final deadline date into their supply chain planning to ensure all unmarked products have been sold prior to this time.

Read more..

 

Arab Regional Tax Forum opens in Dubai

Date: 31 Mar, 2019

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External URL: http://wam.ae/en/details/1395302752099

Arab Regional Tax Forum has discussed ways of balancing tax policies, Arab countries’ competitiveness in managing them, as well as the challenges facing these nations in pursuing their tax policies.

The two-day forum which opened today at the Grand Hyatt Hotel in Dubai, is organised by the Ministry of Finance, MoF, and the Arab Monetary Fund, AMF, in cooperation with the Federal Tax Authority, FTA, and the International Tax and Investment Centre, ITIC.

Dr. Abdulrahman Al Hamidy, Director-General of AMF; and Khalid Al Bustani, Director-General of the FTA attended the ceremony. Senior officials from the Ministry of Finance, top tax policy and administration officials from all AMF member states, senior tax and finance executives from multinational enterprises, tax experts from international organisations, and renowned public finance academics also attended the event.

Dr. Abdulrahman Al Hamidy opened the forum with a welcome speech, following which Sir Mark Moody-Stuart, Honorary Co-Chairman of ITIC and the Director General of the FTA gave the keynote addresses.

The FTA Director-General stressed the importance of holding meetings with senior officials and experts, especially in light of the great economic transformation the region is undergoing. He expressed hope that the Arab Regional Tax Forum will benefit all Arab countries through the discussions and knowledge-sharing on key issues.

UAE's FTA sees more businesses registering for taxes in 2019

Date: 31 Mar, 2019

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External URL: https://www.thenational.ae/business/economy/uae-s-fta-sees-more-businesses-registering-for-taxes-in-2019-1.843517

The number of UAE businesses registering for taxation in 2019 is set to grow from levels previously seen in 2018 as more companies become tax compliant, the head of the Federal Tax Authority said.

The limited number of businesses and people that registered for taxation last year was due to a lack in compliance, Khalid Al Bustani said at the sidelines of the Arab Regional Tax Forum in Dubai on Sunday. However, he said the authority had conducted numerous awareness campaigns to limit the number of those penalised for non-compliance.

The rise in the number of new businesses launched in the UAE will also result in an increase in the number of registrations this year, he added.

“Regarding registration, this is a dynamic process because we have companies that are still reaching the compulsory threshold, when they reach that they need to register,” Mr Al Bustani said.

The Emirates introduced a 5 per cent VAT in January last year, and in 2017, it rolled out an excise tax on fizzy and energy drinks and tobacco, to diversify income and create new revenue streams as part of a plan to lower dependence on oil revenues. The International Monetary Fund estimates the introduction of VAT in the Arabian Gulf region could generate between 1.5 to 3 per cent of non-oil GDP in new revenue.

Bahrain publishes VAT guide on financial services

Date: 31 Mar, 2019

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External URL: https://www.zawya.com/mena/en/economy/story/Bahrain_publishes_VAT_guide_on_financial_services-SNG_141422748/

Bahrain’s National Bureau for Revenue stated that a 5% standard tax is applicable where the payment for the services is made by way of fees, commissions or commercial discount.

The Bahrain National Bureau for Revenue (NBR) has released the first edition of its Financial Services VAT guide (FSI VAT Guide) and Islamic finance products generally have the same VAT treatment as their conventional financial product counterpart.

NBR stated that a five per cent standard tax is applicable where the payment for the services is made by way of fees, commissions or commercial discount.

Additionally, tax exemption will be applied where the payment for the services is made by way of an implicit margin or spread, including interest.

MCA is now a FTA approved Tax Agent

Date: 27 Mar, 2019

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MCA Management Consultants has qualified to represent clients to FTA in matters relating to VAT after earning the approval as a FTA accredited Tax Agent.

MCA has met the stringent conditions specified by the Federal Tax Authorities to attain this approval. The conditions safeguard the interest of registered VAT entities and ensure that VAT computation, filing and audit is as per the guidelines contained in the various statutes of the VAT law in UAE.

Businesses in UAE urged to conduct pre-audit checks of VAT returns for expected tax audits this year

Date: 27 Mar, 2019

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External URL: https://menafn.com/1098309617/Businesses-in-UAE-urged-to-conduct-preaudit-checks-of-VAT-returns-for-expected-tax-audits-this-year

Al Dhaheri Jones and Clark (ADJC) reminded companies anew of properly filing their value added tax (VAT) returns in anticipation of a possible tax audits by the Federal Tax Authority (FTA) this year. The Dubai-based consultancy firm, which is a registered tax agent in the UAE as approved by the FTA, warned that hefty penalties await tax violators in pursuant of Cabinet Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE. Since the implementation of VAT in the UAE at the start of 2018, the number of tax returns received from businesses registered for VAT purposes has exceeded 650,000 as per the report of the FTA.

NBR holds interactive workshop for retail/wholesale sectors

Date: 27 Mar, 2019

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External URL: https://www.nbr.gov.bh/releases/42

The National Bureau for Revenue (NBR) held another interactive VAT workshop for professionals in the retail and wholesale sectors, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a Q-and-A session, 90 representatives from 48 vendors were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to ensure effective implementation of VAT.

Today’s workshop is a continuation of the series of workshops organised by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BD 500,000 to BD 5,000,000 by June.

Over 300,000 businesses now registered for VAT in the UAE

Date: 26 Mar, 2019

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External URL: https://www.arabianbusiness.com/banking-finance/416295-over-300000-businesses-now-registered-for-vat-in-the-uae

More than 300,000 businesses have now registered for WAT in the UAE, according to the Federal Tax Authority (FTA).

At a meeting chaired Sheikh Hamdan bin Rashid Al Maktoum, also Deputy Ruler of Dubai, it was also revealed that the number of approved tax agents operating in the UAE has increased to 316.

It also confirmed the success of the VAT refund procedures for Emiratis building new homes, with 235 applications approved, enabling citizens to recover a total of AED9.76 million.

Sheikh Hamdan commended the positive results, saying: “The Federal Tax Authority has developed comprehensive plans to encourage tax compliance, raise the registration rate among taxable businesses, and combat tax evasion.”

The FTA also announced that the Tax Refunds for Tourists Scheme, which was introduced in November, was recording nearly 6,000 refund transactions per day.

Business visitors to UAE to get VAT refund

Date: 26 Mar, 2019

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External URL: https://www.zawya.com/mena/en/economy/story/Business_visitors_to_UAE_to_get_VAT_refund-SNG_141039144/

The Federal Tax Authority has completed preparations to launch the “VAT refunds for business visitors scheme” from April 2.

The scheme aims to reciprocate the efforts made in countries that offer VAT refunds to visiting UAE businesses,” the FTA said in a statement.

To be eligible for the VAT refund, the first condition is that foreign businesses must not have a place of establishment or fixed establishment in the UAE or in any of the VAT-implementing GCC states.

 

FTA board reviews developments of ongoing projects

Date: 26 Mar, 2019

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External URL: http://wam.ae/en/details/1395302750976

The Board of Directors of the Federal Tax Authority, FTA, has issued a number of executive decisions concerning the Authority’s operations and administrative policies during its 8th meeting, chaired by H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance, and FTA Chairman.

During the meeting, held on Tuesday at the Ministry of Finance’s Dubai headquarters, the Board reviewed a report on the developments of ongoing projects and the FTA’s recent achievements. The report also covered results pertaining to its registration processes for VAT and excise tax and transactions related to filing tax returns, payment of outstanding taxes and collection of recoverable taxes.

The report pointed out that the level of tax compliance in the country has increased, with the number of registrants for VAT exceeding 300,000 registered businesses – tax groups and individuals. Meanwhile, the number of registrants for excise tax reached 719, and the number of approved tax agents increased to 316.

The report confirmed the success of the VAT Refund Procedures for UAE Nationals Building New Residences, with many citizens benefiting from the simple and straightforward electronic procedure that enables them to claim refunds on the taxes incurred on the construction of their new villas and apartments. The study noted that 235 applications were approved, enabling citizens to recover a total of AED9.76 million.

Sheikh Hamdan bin Rashid commended the positive results and major strides the Authority has made since its inception. The FTA saw to the implementation of simple and clear cutting-edge electronic systems, leading to encouraging compliance levels from business sectors. This success was the result of streamlined procedures, an advanced legislative environment, and adherence to high international standards and best practices.

VAT refunds for pavilions at Expo 2020 Dubai

Date: 24 Mar, 2019

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External URL: https://www.khaleejtimes.com/business/local/vat-refunds-for-pavilions-at-expo-2020-dubai

Maximum 20% of pavilion space allowed for commercial activity to claim tax return.
Countries and inter-government agencies will be able to claim value-added tax (VAT) refunds for the costs incurred for the developments of pavilions at Expo 2020 Dubai.
 According to a Cabinet decision posted on the Federal Tax Authority’s (FTA) website, the commercial space should be less than 20 per cent of the space to be entitled for the refund. The Expo 2020 Bureau will largely administer this process.

VAT Refund for Expo 2020

Date: 21 Mar, 2019

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In accordance with the Cabinet Decision No. 1 of 2019 on the ‘Refund of Value Added
Tax Paid on Goods and Services Connected with Expo 2020 Dubai’, Official Participants
of the Expo 2020 are able to claim a refund of VAT incurred by them on the import or
supply of certain Goods and Services.
This document provides guidance for Official Participants of Expo 2020 in respect to the following:

  • The conditions which have to be met to be entitled to claim the VAT refund;
  • The process to be followed to claim VAT; and
  • Information required to complete the relevant forms.

Additional details on the registration requirements along with the importing and customs
details are covered in this user guide.

Click here  to know more

Cabinet Decision is primarily for Expo 2020 Official Participants

Date: 20 Mar, 2019

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This Cabinet Decision is primarily for Expo 2020 Official Participants which includes Countries and Inter Govt agencies. They can claim VAT refund in case they are not VAT registered. Condition is that commercial exhibition space is less than 20% and VAT refund value is more than Aed 200 per transaction. Expo 2020 Bureau will largely administer this process.

Click here   to know more

Is Bahrain facing VAT implementation hurdles

Date: 20 Mar, 2019

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External URL: https://ameinfo.com/money/banking-finance/is-bahrain-facing-vat-implementation-hurdles/

Saudi Arabia and the UAE led the way in January 2018 with the introduction of a 5 percent value-added tax (VAT) as part of the unified GCC VAT Agreement – and Bahrain followed suit in January 2019. This measure in Bahrain, however, could be facing some hiccups.

Value-added tax (VAT) is a type of consumption tax that is placed on the supply of goods and services. It takes into account the “value added” at every step of the supply chain. The GCC framework on VAT, which has been spurred by efforts toward tax transparency and the GCC’s diversification goals, gives sufficient leeway for member states to be flexible on VAT implementation in industries based on local contexts and specifications. Bahrain, for instance, has decided to exclude oil products from VAT, as part of its essential goods exclusion.

Could blockchain transform the GCC's VAT system?

Date: 20 Mar, 2019

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External URL: https://gulfbusiness.com/blockchain-transform-gccs-vat-system/

With the introduction of VAT in the Middle East (UAE, Saudi in 2018 and Bahrain in 2019), the governments had a clean sheet to work with.

From e-registration to manual e-filing, they’ve introduced a lot of technology in a very short amount of time. Companies also had to adapt very quickly and both parties are just beginning their journey of tax and revenue automation.

While the GCC VAT system has just been born, other parts of the world have already traveled a long way in this automation path and there is no doubt these developments will come sooner rather than later in the region.

Read more…

Tourists to Bahrain will be offered VAT refunds through a VAT refund desk at the Bahrain International Airport.

Date: 19 Mar, 2019

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External URL: https://www.newsofbahrain.com/bahrain/52179.html

Tourists to Bahrain will be offered VAT refunds through a VAT refund desk at the Bahrain International Airport. This comes as the Kingdom’s National Bureau for Revenue (NBR) announced the launch of a VAT refund desk at the Bahrain International Airport yesterday. The set up is in collaboration between the Bahrain Airport Company and international payment specialist Planet Payment. The NBR stated that the new desk will offer VAT refund solutions for tourists and non-residents visiting the Kingdom as well as citizens residing abroad. “The VAT refund desk uses an integrated system that allows VAT refund claims on local purchases from over 300 retail outlets across the Kingdom,” the NBR stated.

“The VAT refund desk represents one of many measures the Kingdom is implementing to expand regional and international tourist base, while increasing market competitiveness and expanding growth across Bahrain’s established tourism sector,” it added. Chief Commercial Officer of the Bahrain Airport Company, Ayman Zainal said, “The BAC is pleased to support the Ministry of Finance and National Economy and the National Bureau for Revenue in Bahrain with this important function. Two dedicated stands will be set up at the airport, where tourists can avail hassle-free VAT refunds on their shopping.” The Country Manager of Planet Payment, Eyad Al Kourdi, commented, saying, “Planet is proud to be working closely with the National Bureau for Revenue and the Bahrain Airport Company to deliver a fast, efficient and state-ofthe-art digital VAT refund scheme as the Kingdom’s tourism and retail sectors continue to grow and attract shoppers from across the world.” The NBR explained the VAT refund process stating, “Claimers are required to present their passports, entry visa permits, GCC National IDs, or residency permits for Bahraini nationals living abroad, when shopping VAT free”.

Read more..

KPMG Organizes a Seminar on Tax Compliance and Reporting for Businesses in Bahrain

Date: 17 Mar, 2019

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External URL: https://www.albawaba.com/business/pr/kpmg-organizes-seminar-tax-compliance-and-reporting-businesses-bahrain-1266694

Approximately 200 key members from the business community in the Kingdom of Bahrain attended an exclusive seminar organized by KPMG in Bahrain for VAT registered and to-be registered businesses to discuss tax compliance and reporting obligations.  This in preparation for the first VAT return cycle coming up in April this year. VAT has now been live in the Kingdom of Bahrain for nearly three months and by latest 30 April 2019, VAT registered businesses will be required to submit their first VAT return to the National Bureau for Revenue (NBR).

 Philippe Norré, Partner and Head of Taxes and Corporate Services at KPMG in Bahrain was the keynote speaker and shared insights from his long experience in rolling out and leading KPMG’s Global Indirect Tax Compliance approach.  He explained and discussed the detailed requirements outlined by the Bahraini VAT legislative framework.  “Not only are VAT registered businesses required to submit correctly completed VAT returns and do by deadline together with any payment due, but the compliance and reporting obligations for VAT do require keeping a set of quality documents to support the numbers reported and allowing for an end-to-end reconciliation including with the General Ledger (purchase orders, contracts, invoices, import and export documentation, debt and credit notes and others). As further official guidance notes are issued by NBR a proper knowledge management process is required to keep fully abreast of all developments around VAT in Bahrain. ” He commented during the event.

Real Estate guide for Bahrain

Date: 17 Mar, 2019

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External URL: http://www.allaboutvat.com/wp-content/uploads/Real-Estate-update-17032019.pdf

Summary of VAT on Real Estate sale/Lease

Exempt Standard rated
  •  Sale/lease of  property
  •  Sale/lease land
  •  Labour accommodation
  •  Car parking for > a month
  •  Serviced accommodation  more than a year
  •   Hotel accommodation  and related   services
  •   Paid car parking for period < 1 month
  •   Non Exclusive serviced office space
  •   Function hall
  •   Management services, utilities,     telecommunications etc
  •   Signage and permissions
  •   Services charged separately
  •   Furnished apartments   with  tourism  licence
  •   Storage services
  •   Short term retail and promotional stands
  • No VAT on furniture, unless charged separately from accommodation.
  • VAT to be charged on services provided in addition to serviced space
  • VAT to be charged on provision of space for retails and promotional stands for < 1 month
  • Normal place of rules applicable for insurance of real estate property

 

Click here to know more

NBR announces the opening of a new VAT refund desk for visitors at Bahrain International Airport

Date: 17 Mar, 2019

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External URL: https://www.nbr.gov.bh/releases/39

Bahrain’s National Bureau for Revenue (NBR) today announced the launch of a VAT refund desk at the Bahrain International Airport. Launched in collaboration between the Bahrain Airport Company and Planet, the new desk offers VAT refund solutions for tourists and non-residents visiting the Kingdom of Bahrain as well as citizens residing abroad.

The VAT refund desk uses an integrated system that allows VAT refund claims on local purchases from over 300 retail outlets across the Kingdom.

The VAT refund desk represents one of many measures the Kingdom is implementing to expand regional and international tourist base, while increasing market competitiveness and expanding growth across Bahrain’s established tourism sector.

Commenting on the announcement, the Chief Commercial Officer of the Bahrain Airport Company, Ayman Zainal said:

“BAC is pleased to support the Ministry of Finance and National Economy and the National Bureau for Revenue in Bahrain with this important function. Two dedicated stands will be set up at the airport where tourists can avail hassle-free VAT refunds on their shopping.”

The Country Manager of Planet, Eyad Al Kourdi, also welcomed the launch of the new desk saying:

“Planet is proud to be working closely with the National Bureau for Revenue and the Bahrain Airport Company to deliver a fast, efficient and state-of-the-art digital VAT refund scheme as the Kingdom of Bahrain’s tourism and retail sectors continue to grow and attract shoppers from across the world.”

The NBR also outlined the following steps for completing VAT refund submissions at the Bahrain International Airport:

Claimers are required to present their passports, entry visa permits, GCC National IDs, or residency permits for Bahraini nationals living abroad, when shopping VAT Free.

Claimers need to request VAT free tags, available at retail stores, upon completing their purchase. The tags can be attached to receipts, which will be validated along with purchased goods at the VAT refund desk during check out.

Refunds will be paid in cash or via a credit/ debit card account provided by the claimer.

We must ensure smooth VAT implementation

Date: 15 Mar, 2019

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External URL: http://www.gdnonline.com/Details/509638/We-must-ensure-smooth-VAT-implementation

Bahrain being part of GCC, is obliged to comply and apply the VAT treaty which came to face and absorb some difficulties. First, it is better to mention that the new VAT is of certain features including, among other things, a small rate of five per cent compared with 17 to 20pc in developed countries including Germany, France and the UK. Also, the exemption of many essential products and services “zero rated” from the VAT. I believe, such strategy is intended due to the absence of taxation culture in the region.

This year, the implementation of VAT in Bahrain, is in progress but not free from obstacles. Including, some companies are yet to complete IT systems, train staff, comprehend the process, registration issues, VAT return process and confusion over tax invoices. Moreover, other related issues have started as consequence to VAT, namely prices increase to face VAT. Such points need time to settle and firm actions are required. By all means, costs rationalisation is needed and there should be regulations to supervise and control the market to escape adverse consequences due to VAT.

How to claim VAT refund for Tourist?

Date: 14 Mar, 2019

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External URL: https://www.planetpayment.com/en/countries/uae/#

Tourist leaving the country can claim the VAT refund within 90 days from the date of purchase.

You will receive 85% of the tax paid, minus a fee of 5 AED per Tax Free tag validated. Tax Free tags are stuck to every invoice that you obtain.

There are two counters for claiming the refund. One in the checkin area and the other past immigration. The check-in area counter can process refunds of bills upto 8000 AED and can refund to your credit card directly. If you need cash, you can process the claim at this counter, but to obtain the refund in cash you must go past immigration and collect in US Dollars from Travelex counter.

To claim for bills of value over 8000 AED you are expected to carry and show the item at the counter after immigration in the terminal. They will follow the similar method of directly crediting your card or collect cash from Travelex.

You will not get the full VAT refunded as you are supposed to get only 85% refund, plus pay 5 AED for the tag placed on your bill and the exchange fee to convert to US dollars.

Planet is the official agent for processing refunds and has counters in the check in area, and inside the airport.

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UAE expects to reach deal with EU soon on tax-haven blacklist

Date: 13 Mar, 2019

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External URL: https://www.khaleejtimes.com/business/banking-finance/uae-expects-to-reach-deal-with-eu-soon-on-tax-haven-blacklist

The UAE expects to reach an amicable solution with the European Union soon on the issue of including the emirate in the list of non-cooperative jurisdictions for tax purposes, said a senior UAE banking official.

“I am sure this issue will be solved in the near future. I think it was due to lack of communication and lack of understanding. The EU will be approached and discussed; I’m sure there will be a way out,” said Abdul Aziz Al Ghurair, chairman of the UAE Banking Federation and CEO of Mashreq Group.

“Because we have chosen to be international financial centre, so we have to comply with world regulations. We had issues like this in the past and were solved,” Al Ghurair told media on the sidelines of a banking conference in Dubai on Wednesday.

The UAE on Wednesday regretted the European Union’s decision to include it on a list of non-cooperative jurisdictions for tax purposes. This inclusion was made despite the UAE’s close cooperation with the EU on this issue and ongoing efforts to fulfill all the EU’s requirements, Wam said in a statement.

The UAE said it had shared with the EU a detailed timeline of actions that it is currently implementing in accordance with its sovereign legal process and constitutional requirements.

Dubai Refreshment Co's 2018 profits drop 54% after VAT, excise tax

Date: 12 Mar, 2019

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External URL: https://www.arabianbusiness.com/retail/415206-dubai-refreshment-cos-2018-profits-drop-54-after-vat-excise-tax

The implementation of value-added tax (VAT) and excise tax amounted to 60 percent of the Dubai Refreshment Company’s net local revenue and led to higher consumer prices, according to a statement to shareholders posted to the Dubai Financial Market.

In the statement, Dubai Refreshment Company, which is the sole bottler and distributor for PepsiCo in the UAE, said that the company “was forced to pass these taxes to the consumer”.

“This happened at a time when other sugary non-carbonated drinks were not subject to the excise tax and as such did not need to increase their prices,” the statement added.

 “The price increase on company products combined with favourable tax advantages for non-carbonated sugary drinks put DRC products at a significant competitive disadvantage which resulted in significant reduction in sales and profit.”

In 2018, Dubai Refreshment Company’s net profit fell 54 percent to AED 42.3 million ($11.52 million). Revenues totalled AED 646 million ($175.87 million), a 26 percent decline when compared to the year before.

“The situation was especially difficult in the first few months after the excise tax implementation, however, through a combination of sales improvement and cost reduction initiatives, the company has been able to stabilise the situation and return to reasonable profitability,” the statement said.

Dubai Refreshments distributes carbonated, non-carbonated and bottled water products. Some of brands under Dubai Refreshments’ portfolio include Pepsi, Diet Pepsi, 7-Up, Diet 7-Up, Mountain Dew, Miranda, and Shani, Mountain Dew and Aquafina.

What inflation? Cost of living set to decrease in UAE in 2019

Date: 10 Mar, 2019

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External URL: https://www.khaleejtimes.com/business/economy/what-inflation-uae-cost-of-living-set-to-decrease-in-2019-1

Following a big jump in inflation in 2018 after the implementation of a 5 percent value-added tax, some economists believe that the UAE economy will slip into deflation this year following a persistent decline in housing and fuel prices and an oversupply in the retail and hospitality sectors.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, said the UAE consumer price index contracted by 2.4 percent on a year-on-year basis in January from a 0.4 percent rise in December.

“We had expected to see deflation from January as the impact of the introduction of VAT in 2018 dropped out of the annual data and with the fall in housing and fuel prices,” she said.

The UAE levied 5 percent VAT on a host of goods and services from January 1, 2018 as part of a GCC framework agreed among the Gulf nations, resulting in a spike in inflation in the first few months of the implementation.

Contractors want faster processing on VAT refunds

Date: 09 Mar, 2019

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External URL: https://gulfnews.com/business/contractors-want-faster-processing-on-vat-refunds-1.62552671

Dubai for UAE’s contractors, when they get VAT refunds is getting to be as important as the amounts involved.

“As a main contractor, I will have to pay all the VAT-related costs to the subcontractor or supplier,” said K.A. Siddiqui, Partner at Dubai Walls Construction. “It automatically becomes part of the LPO (local purchase order). There can’t be any delay on our part because any delay will invite penalties and becomes a criminal offense.

“The second I invoice something, I have to pay up … whether the client had paid me or not.”

Which is why contractors are now insisting on clients and project promoters to, in turn, shorten the payment cycles in releasing funds due to them.

IMF says VAT launch in Bahrain a 'significant step'

Date: 07 Mar, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/414919-imf-says-vat-launch-in-bahrain-significant-step

Economic activity in Bahrain was subdued in 2018 and is expected to remain at about 1.8% this year, says the International Monetary Fund.

Economic activity in Bahrain was subdued in 2018 and is expected to remain at about 1.8 percent this year, according to the International Monetary Fund (IMF).

The IMF described the introduction of value added tax (VAT) in January as “a particularly significant step”, as are plans for cost recovery in utilities and further means-tested subsidy reforms.

It added that the Fiscal Balance Program (FBP), accompanied by $10 billion in regional support, marks a major step in Bahrain’s reform agenda and has alleviated near-term financing constraints.

NBR holds interactive workshops

Date: 06 Mar, 2019

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External URL: https://www.nbr.gov.bh/releases/34

The National Bureau for Revenue (NBR) held two consecutive VAT workshops for professionals working in the education, healthcare, service and utility industries, during which the NBR recapped general and sector-specific VAT concepts, including invoicing and filing.

Following a question-and-answer session, around 190 representatives from 100 companies and institutions were given the opportunity to visit the unique interactive demo-center that provides innovative learning experiences to maximize participants’ assimilation and implementation of the materials presented.

Today’s workshop is a continuation of the series of workshops organised by the NBR to provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

VAT challenges in spotlight at forum

Date: 04 Mar, 2019

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External URL: http://www.gdnonline.com/Details/507804

Around 25 key officials from financial institutions in Bahrain attended an exclusive closed roundtable discussion organised by KPMG in Bahrain to discuss the challenges faced by the financial services sector following the formal introduction of Value Added Tax (VAT) in Bahrain. Philippe Norré, partner and head of indirect taxes at KPMG in Bahrain, was the moderator during the event and said “With their first VAT returns due latest by 30 April 2019, banks and other financial institutions still face lack of VAT treatment clarity around several typical financial offerings .

NBR holds interactive workshops for the food, hospitality, communications and entertainment industries

Date: 04 Mar, 2019

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External URL: https://www.nbr.gov.bh/releases/35

The National Bureau for Revenue (NBR) held two consecutive workshops primarily aimed at increasing the VAT awareness of professionals working in the food & hospitality and communications & entertainment industries.

The workshops attracted 150 representatives from 85 vendors, and recapped general and sector specific technical VAT concepts, invoicing and filing requirements, as well as a question and answer session.

Following the workshop, attendees visited the unique interactive demo-center that provides innovative learning experiences to assist vendors in implementing VAT.

The NBR will continue to organize workshops that provide an inclusive platform for all stakeholders from the public and private sectors to ensure the smooth registration of companies with an annual supply of BHD 500,000 to BHD 5,000,000 by June.

Bahrain cutting budget deficit

Date: 03 Mar, 2019

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External URL: https://thearabweekly.com/bahrain-cutting-budget-deficit

Bahrain recently quickened the pace of economic reforms by passing a package of laws, notably the introduction of a VAT and pension reforms.

The 5% VAT is one of the key commitments under the Gulf Finance programme. The agreement provides for the imposition of a VAT in all Gulf Cooperation Council countries during the current year.

The tax is to promote and diversify non-oil financial revenues. It comes after the introduction in December of a tax, ranging 50-100%, on tobacco and its derivatives, soft drinks and energy drinks.

Bahrain gov't revenues 'out of sync' with non-oil growth - Minister

Date: 27 Feb, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/414186-bahrain-government-revenues-out-of-sync-with-non-oil-economy-growth-says-finance-minister

Minister of Finance and National Economy says growth of Bahrain’s non-oil economy has averaged about 7.5% per year Bahrain gov’t revenues ‘out of sync’ with non-oil growth – minister Bahraini government revenues have not kept pace with the growth of the kingdom’s non-oil economy, according to Sheikh Salman bin Khalifa Al Khalifa, Minister of Finance and National Economy.

Speaking at the GCC Financial Forum in Manama on Wednesday, Sheikh Salman said that non-oil economic growth in Bahrain has averaged approximately 7.5 percent per year.

“There’s a very positive story in the non-oil economic growth space,” he said. “What has been the issue is that non-oil revenues generated by the government have not kept up with that growth.”

Bahrain is currently in embarking on a plan to balance its budget by 2022, a key requirement of a $10 billion aid package funded by neighbouring states including the UAE and Saudi Arabia.

Last year, the country managed to trim its deficit by 35 percent to $3.5 billion. On Monday, Bahrain’s government approved a draft budget for the coming two years that projects a reduction of the deficit to $1.63 billion by 2020.

“As we continue on our deficit reduction measures, it will be of extreme importance that we look at the reduction of operating expenditure and an increase in revenues, non-oil revenues in particular, and that all our spending on subsidies is directed towards citizens,” Sheikh Salman said at the event.

Since VAT was introduced in Bahrain on January 1, Sheikh Salman said that more than 2,000 companies have registered already, more than two-thirds of which are below the legal threshold and have registered because of the positive incentives of refunds.

“It’s working well,” he said, noting that laws passed in Bahrain have zero-rated and exempted certain industries to ensure that citizens are protected from inflationary pressure and that economic growth continues.

Looking to the future, Sheikh Salman said he predicts that Bahrain’s logistics, tourism, financial and oil and gas sectors will continue to be the biggest drivers of economic growth.

Earlier in the week, the governor of Bahrain’s Central Bank said he expects the economy to grow at between 2.0 and 2.5 percent in 2019, similarly to last year.

NBR holds workshops along with its first demo center to educate vendors

Date: 25 Feb, 2019

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External URL: https://www.nbr.gov.bh/releases/32

The National Bureau for Revenue (NBR) held two workshops today for retail and wholesale vendors followed by an interactive demo center providing on-spot assistance and information regarding VAT, at the Ministry of Finance and National Economy.

The VAT demo center is designed to provide vendors with a live step-by-step guide on VAT readiness, and is part of the NBR’s efforts in ensuring the correct implementation of VAT within the Kingdom of Bahrain.

140 representatives from various retail and wholesale vendors attended two workshops that provided a general overview on VAT, sector specific content, invoicing and filing requirements, as well as a question and answer session, to ensure they are well informed on relevant VAT concepts.

The workshops were followed by access to the live demo center that provided an interactive experience on technicalities of VAT to ensure vendor readiness on VAT application.

The workshops and demo center are part of the NBR’s commitment to increase public and private stakeholders’ awareness and transparency regarding the treatment of the VAT across all sectors.

The NBR highlighted the importance of spreading awareness on VAT technicalities at this initial phase, given that companies with an annual revenue of BHD 500,000 to BHD 5,000,000 are set to register for VAT by June of this year.

Planet Payment to build Bahrain's tourist VAT refund scheme

Date: 21 Feb, 2019

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External URL: http://tradearabia.com/news/TTN_351366.html

Rana Faqihi, the assistant undersecretary for Public Revenues Development, has signed a contract with international payment specialists Planet Payment to begin work on the VAT refund scheme for tourists, said a report.

Planet Payment has been chosen to oversee Bahrain’s VAT tourist refund scheme based on their knowledge and expertise in the field of international payment solutions

Planet has been operating for 30 years in 58 different countries regionally and worldwide, and currently operate the UAE’s VAT tourist refund scheme, it said.

The new refund system will be established and ready during this year, Faqihi noted.

Upon completion of the payment infrastructure, tourists visiting Bahrain will be able to claim refunds on a percentage of VAT paid on purchases during their visit to the kingdom. Reimbursements will be made through a fully integrated digital system that connects registered companies in the scheme to the points of exit at Bahrain International Airport, the report said.

MOFNE signs contract with Planet Payment to build VAT tourist refund scheme

Date: 20 Feb, 2019

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External URL: https://www.nbr.gov.bh/releases/31

The Assistant Undersecretary of Development and Policy of Public Revenues, Rana Faqihi, today signed a contract with the international payment specialists Planet Payment, at the Ministry of Finance and National Economy. The contract has been signed to begin work on the tourist refund scheme for VAT paid by tourists during their stay in the Kingdom.

Planet Payment has been chosen to oversee Bahrain’s VAT tourist refund scheme based on their knowledge and expertise in the field of international payment solutions. Planet has been operating for 30 years in 58 different countries regionally and worldwide, and currently operate the UAE’s VAT tourist refund scheme.

Faqihi noted that the collaboration with Planet Payment is in line with the National Bureau for Revenue’s efforts in ensuring the correct implementation of VAT, and that the new refund system will be established and ready during this year.

Upon completion of the payment infrastructure, tourists visiting Bahrain will be able to claim refunds on a percentage of VAT paid on purchases during their visit to the Kingdom. Reimbursements will be made through a fully integrated digital system that connects registered companies in the scheme to the points of exit at Bahrain International Airport.

VAT reimbursements are a common practice introduced to increase visitor expenditure and boost the inflow of tourists as a stimulant for businesses’ competitiveness and overall economic growth.

Has VAT been a taxing experience?

Date: 20 Feb, 2019

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External URL: https://www.meed.com/vat-regime-uae-pinsent-masons/

The introduction of VAT is just one of the many fiscal strategies that will enable the UAE to achieve its medium to long-term objectives to become an economic powerhouse and world-class business hub.

A VAT system by its nature is a flexible tool for governments to regulate their annual budgets, contributing to higher revenue intake and a healthier ability to influence economic growth. This is evidenced in numerous OECD, IMF and domestic Central Bank financial and economic reports. These indicate significant increases in tax-to-GDP ratios as a result of the introduction of a new VAT regime and/or the fluctuation of rates within mature regimes.

The UAE and indeed the GCC’s rationale for the introduction of VAT, together with the related revenues it hopes to generate, give some context to our consideration of whether it has impacted activity in the region, and in particular the construction industry.

VAT has the essential characteristic of an economically neutral tax—ie, it flows through businesses and tax supplies to final consumers. Once a new VAT system has been introduced and businesses have adjusted, VAT should not be a direct cost for businesses and careful management of associated compliance, cash flow and administration costs should limit the indirect impact. Associated inflation is also generally short lived.

For a VAT regime to be successful in its aim of neutrality for businesses, and therefore limit the impact on trade, there are a number of key contributing factors: the VAT rates and structure; VAT thresholds and phased introduction; administration of the system; and exemptions.

Transitional challenges
If we look at these in the context of the construction industry, they give us a clearer picture of some of the challenges that businesses may have faced during the first year of implementation in the UAE and Saudi Arabia, and the resulting impact on the industry across the region.

For such an important, high-value sector, the application of a considerably low rate of 5 per cent was crucial in aiding the industry to adjust to this new demand on working capital. Also, the implementation of a simple VAT system was tactical in supporting comprehension and early adoption, especially in the UAE where businesses did not historically have experience with federal tax regimes.

Over 2,000 local and international vendors registered for the VAT

Date: 18 Feb, 2019

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External URL: https://www.nbr.gov.bh/releases/30

The National Bureau for Revenue (NBR) today announced that over 2,000 local and international vendors have registered for the VAT. The NBR recognized the private sector’s efforts exerted towards ensuring the proper implementation of the VAT, which includes registering for the VAT prior to levying the standard 5% tax.

Consumers are reminded that all registered vendors are legally required to display their VAT registration certificate that includes vendors’ Commercial Registration number and their VAT registration date, prior to levying the 5% VAT.

Should I pay tax on the sale of company assets?

Date: 18 Feb, 2019

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External URL: https://www.thenational.ae/business/money/vat-q-a-should-i-pay-tax-on-the-sale-of-company-assets-1.827120

Legislation states that VAT is charged on taxable supplies made in the normal course of your business. Some argue that selling fixed assets, such as furniture, is outside the normal course of business and is not vatable.

I don’t agree with this argument and advise charging the tax on the sale of all company assets. The purchase of assets used to generate taxable sales are part of most businesses’ normal activities. When you purchase the new office furniture you will be charged VAT on the purchase, which you can recover in full against your output VAT on taxable sales. It makes sense therefore that if you can recover VAT on a purchase of assets, you should then charge VAT on a subsequent sale of the same item.

Food delivery? VAT compliance should be on the menu

Date: 18 Feb, 2019

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External URL: https://www.khaleejtimes.com/20190218/no-title

Getting food at your doorstep using technology could have never been imagined until the tech giants like Uber, Zomato and more recently Talabat and Careem have made it possible. Simply using fingers on customer friendly apps, one can now conveniently anytime during the day order food that will be delivered to your office or home.

Online food delivery apps typically work on the aggregator model where various restaurants are aggregated on the digital platform that allows customers to choose the restaurant and place the order. The order is passed to the restaurant that cooks the food and the app staff gets it delivered at the customer’s doorstep.

The food delivery apps earn income from various sources – delivery fee charged from customers, a commission from restaurants, premium listing fee from restaurants to list them on the app and third-party ad revenue through Google ads. Each source of revenue needs a close look to ensure its appropriate taxability.

The areas of attention for apps are more on identifying who’s the supplier of food & delivery and whether they are two separate supplies or one composite supply. Typically, the apps only act as pure delivery service providers obliged to account for VAT on the delivery fee. The VAT treatment may differ where food is simply picked up from the restaurant and delivered to the customer vis-à-vis where the app buys and store food packets to ensure faster delivery to the hungry customers during peak hours.

In the first situation, delivery fee from customers and commission from restaurants are taxable supplies. In the second situation, the app will have to account for VAT on the supply of food and its delivery to customers but simultaneously also be eligible to reclaim the VAT paid to the restaurant on the purchase of the food packets.

The VAT may still apply under the deemed supply provisions where the food bought by the app could not be sold but consumed internally by its staff. If VAT paid to the restaurant was recovered, there would be an obligation to account for VAT on the value of food unsold.

To entice customers hook on to the app, various promotional schemes are launched. A customer may be given a Dh50 voucher redeemable against the order to reduce his cash payout. The app will pass on the discount from its own income. Correct accounting for discounts, VAT and its appropriate reflection on the invoice is important. The VAT position will be different where the customer is given a voucher not sponsored by the app, rather by a third party. It is important to structure the transactions properly to avoid any VAT dispute later.

Separately, the customers may also be given freebies when the order value exceeds a threshold. This can be a free dessert etc. The app would typically ask the restaurant to pack the freebie along with the order and later pay the restaurant for the value of the freebie. Similarly, some apps also make the orders free of cost should the food is not delivered within a specified time. Whether supply of a freebie or making the food free qualify as a deemed supply and subject to VAT should be analysed.

The apps also earn revenue from placing adverts. The UAE VAT law considers online advertisements as a supply of electronic services subject to VAT based on their use and enjoyment in the UAE. It is critical to analyze the contract with the clients, their location and the location of the target audience. The app’s client may be located outside the UAE, but the adverts are targeted for the UAE audience to increase revenue for the client’s UAE based restaurants. Will this be considered a zero-rated supply (since the client does not have a presence in the UAE) or should it be subject to the standard rate of VAT since the use and enjoyment of the advert happens in the UAE. It is important the app is able to demonstrate legally the actual place of use and enjoyment of the adverts for appropriate VAT treatment.

Issuance and delivery of the tax invoice is mandatory in the VAT law. The app should issue a tax invoice to the customers and ensure it is delivered. It has been observed generally, the app emails a payment summary to the customer that captures the value of food plus the delivery fee and VAT on it. The food invoice is issued by the restaurant and delivered by the app staff to the customer. The app should also issue and deliver a separate simplified tax invoice to the customer for the delivery fee. Non-delivery of this invoice will be considered a non-compliance of the VAT law. Where the delivery fee is fixed, the amount of VAT on it should be considered inclusive. The VAT amount, however, needs to be shown clearly on the invoice.

The online delivery concepts are fairly new and the tax authorities across the globe are increasingly finding it challenging to tax them. Because of different business models prevalent, identifying and putting a tax treatment on every transaction becomes a task. It is critical for businesses to be vigilant on how the contracts are structured and ensure no transaction goes unnoticed by their tax team.

The impact VAT has had on UAE hiring levels

Date: 16 Feb, 2019

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External URL: https://www.arabianbusiness.com/jobs/413123-revealed-how-has-vat-affected-uae-hiring-levels

The majority (84 percent) of recruiters and human resource (HR) professionals in the UAE remain confident about their ability to recruit the right candidates for businesses, according to a new survey.

However, more than half (56 percent) have experienced candidates demanding above average salaries since the roll out of VAT, according to the Recruiter Sentiment Survey by LinkedIn, the world’s largest professional network.

The survey said the implementation of VAT in the UAE at the start of 2018 does not seem to have affected hiring rates, with most respondents (57 percent) seeing an increase in hiring from April to December 2018, when compared to the same period in 2017.

The top reasons for the increase in hiring from April to December 2018 were attributed to business growth (63 percent), availability of more suitable candidates (52 percent) and access to relevant talent insights (51 percent).

However, over half (55 percent) of respondents stated that there was a greater supply of candidates than available roles.

“It is interesting to see that despite the introduction of VAT, the UAE job market and workforce appears to remain confident. However, the new tax does appear to be putting added pressure on businesses as candidates demand higher salaries to compensate for the increase,” said Ghassan Talhouk, head of LinkedIn – UAE LinkedIn Talent Solutions.

The survey revealed that the most in-demand roles since the implementation of the VAT regime were tax and finance executives and IT specialists, as companies geared up for VAT -compliance.

According to the survey findings, transport, public administration and design sectors are among the hardest to find candidates for, while the hiring rates in IT, food and beverage and hospitality industries have peaked since the start of 2018.

IMF Managing Director commends UAE for strengthening its fiscal framework

Date: 09 Feb, 2019

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External URL: http://wam.ae/en/details/1395302738139

The UAE is launching a fiscal risk management project with the IMF’s help and will produce its first fiscal stress test this year, according to Christine Lagarde, Managing Director and Chairwoman of the International Monetary Fund (IMF).

Speaking at the main session of the Fourth Annual Arab Fiscal Forum organized by the IMF, Arab Monetary Fund, AMF, and the UAE Ministry of Finance, today at the World Government Summit 2019, Lagarde commended the UAE and other countries in the region for strengthening their fiscal frameworks.

She said that the UAE as well as Saudi Arabia, Kuwait, Sudan and Lebanon have set up macro-fiscal units, a useful first step in strengthening the fiscal framework while Algeria has recently adopted a new budget law with a strong medium-term orientation. Bahrain has introduced a fiscal program designed to achieve balance over the medium term while Mauritania, Morocco, Jordan, and Lebanon are making great progress with medium-term public investment planning and execution. Egypt now publishes a fiscal risk statement with its budget and produces an internal in-year budget risk assessment.

Speaking on the importance of fiscal policy, the head of the IMF said it plays a vital role in creating and nurturing the vision of sustainable and inclusive growth, especially as encapsulated in the Sustainable Development Goals. “This is because we need fiscal space for spending on health, education, social protection, and public investment all key priorities in this region.” She noted that without a stable foundation, even the best policies can flounder.

Earlier in her speech, Lagarde expressed her happiness at being in Dubai which she called the “city of tomorrow” where “its economic leaders are dedicated to realizing the vision of a better tomorrow.”

“This vision is predicated on prosperity that is shared by all, benefiting the poor and the middle class, citizens and immigrants alike; and opportunities that are open to all, including women. It is a vision of fairness over cronyism and partiality, and of trust that government policy is oriented toward the common good.”

“This is a big vision. But as His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai,once said “The bigger your vision, the bigger your achievement will be we cannot let fear keep us small. We have to be brave to be big.”

Speaking about the economic environment in the Arab region, Lagarde said it has not yet fully recovered from the global financial crisis and other big economic dislocations over the past decade. “Among oil importers, growth has picked up, but it is still below pre-crisis levels. Fiscal deficits remain high, and public debt has risen rapidly from 64 percent of GDP in 2008 to 85 percent of GDP a decade later. Public debt now exceeds 90 percent of GDP in nearly half of these countries.”

She said that oil exporters have not fully recovered from the dramatic oil price shock of 2014. “Modest growth continues, but the outlook is highly uncertain reflecting in part the need for countries to shift rapidly toward renewable energy over the new few decades, in line with the Paris Agreement. With revenues down, fiscal deficits are only slowly declining despite significant reforms on both the spending and revenue sides, including the introduction of VAT and excise taxes. This has led to a sharp increase in public debt from 13 percent of GDP in 2013 to 33 percent in 2018,” she added Lagarde also drew attention to the broader economic context bearing on fiscal policy in the region. “We now think that the global economy will grow by 3.5 percent this year, 0.2 percentage points below what we expected in October. And risks are up, given escalating trade tensions and tightening financial conditions. Unsurprisingly, a weaker global environment has knock-on effects on the region through a variety of channels trade, remittances, capital flows, commodity prices, and financing conditions.”

She said the bottom line of all this is that “the economic path ahead for the region is challenging. This makes the task of fiscal policy that much harder, which in turn makes it even more important to build strong foundations to anchor fiscal policy.”

Speaking further on the importance of strong fiscal policy, Lagarde said the two key pillars of good fiscal management are robust fiscal frameworks, and good governance and transparency. “There is scope to improve fiscal frameworks in this region. Some of the weaknesses are short-termism and insufficient credibility,” she said.

“Corruption is the great disruptor of fiscal policy. Without trust in the fairness of the tax system, it becomes harder to raise the revenue needed for critical spending on health, education, and social protection. Governments might be tempted to favor white elephant projects instead of investments in people and productive potential. Add this up, and we have a recipe for unsustainable fiscal policy combined with social discord,” she said.

Lagarde concluded by saying that good fiscal policy requires good institutional foundations. “Solid foundations in areas such as fiscal frameworks and governance give citizens confidence that fiscal policy serves the good of all, not just the wealthy or the well-connected,” she said

Revealed: Impact of VAT in Saudi Arabia, UAE, one year on

Date: 07 Feb, 2019

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External URL: https://www.arabianbusiness.com/politics-economics/412762-revealed-impact-of-vat-in-saudi-arabia-uae-one-year-on

2019 economic outlook: Weaker oil would put pressure on expenditure in countries with higher break-even prices

Early data suggests that the inflationary impact of the value-added tax (VAT) in both Saudi Arabia and the UAE has largely been contained, according to the most recent PwC Middle East Economy Watch.

Richard Boxshall, senior economist at PwC Middle East, writing in the report, said the impact of VAT in Saudi Arabia was “limited”, mainly because it raised more revenue than was initially expected.

“Overall, the new tax policy has been relatively successful in diversifying government revenue without producing excessive inflation,” he said. “A fuller picture will emerge over the next six months or so, including from studying Bahrain, which joined the VAT club this year.”

Saudi Arabia’s preliminary fiscal outturn data, released alongside the budget in December, estimates that VAT raised $12.2bn in 2018 – nearly a third more than it had expected.

In a January 2018 projection made by the General Authority of Zakat & Tax, the amount raised is equivalent to about 1.6% of GDP.

“This suggests a relatively high efficiency of collection in relation to private consumption by international standards,” said Boxshall.

“The VAT brought in more funds than the expat levy and excise taxes combined, and triple the amount from taxes on income and capital gains.”

While no data is available on the UAE as yet, Boxshall said it is likely to be higher in relative terms than in Saudi Arabia “because private consumption makes up a larger share of the economy”. Seventy percent of the revenues will be distributed to each of the seven emirates, potentially providing a substantial boost for some.

Best year for exporters
Boxshall said 2018 was the best in five years for Middle Eastern oil exporters, driven by two main factors – rising oil prices and increased government spending.

“This combination of stronger prices, as well as fiscal and structural reforms put these economies on a solid footing for 2019, despite a weaker final quarter marked by increased geopolitical risks and oil prices falling into correction by year’s end,” he said.

Oil market developments are likely to be the dominant economic driver for the region once again in 2019, following the sharp decline in prices in the final months of 2018, and OPEC and its allies agreeing to cut output by 1.2m barrels a day in November.

Boxshall said weaker oil would put pressure on expenditure in countries with higher break-even prices.

“This includes Saudi Arabia, whose 2019 budget envisages a 20% increase in capex and a 7% overall increase compared with the 2018 outturn,” he said. “However, Saudi Arabia’s low debt level (about 19% of GDP) means it can finance a larger deficit if needed, although it is still aiming to balance its budget by 2023.”

Active year for M&As and IPOs
Whatever happens at a macroeconomic level, 2019 is likely to be an active year for corporate transactions, which includes major M&A and IPO activity.

Banking sector mergers are under discussion in several countries. The region is widely recognised as being overbanked and has begun to consolidate over the past few years. As banks scale up through mergers, this should boost the sector’s capacity to finance projects and businesses, supporting growth.

Meanwhile, efforts to attract investment will continue, including the announcement of which sectors are eligible for 100% onshore foreign ownership under a new UAE law. There should also be progress in privatisation efforts in Saudi Arabia, Oman and Kuwait.

Applying VAT on EWA bills ‘unconstitutional’

Date: 06 Feb, 2019

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External URL: http://www.newsofbahrain.com/bahrain/50956.html

A Bahraini lawyer has insisted that the recent decision by the Electricity and Water Authority (EWA) to apply Value Added Tax (VAT) on subscribers’ bills are unconstitutional, demanding immediate cancellation of the decision. This came as lawyer Mohammed Al Thawadi appeared before the High Administrative Court, which is examining a complaint lodged by him against the authority. The court said yesterday that it would issue its final verdict in the case on February 24.

In his statements, the lawyer asserted that the decision is unconstitutional, claiming that Articles 15 and 17 of the Constitution of the Kingdom stipulate that taxes should only be imposed through legislation. Mr. Al Thawadi also accused EWA of not adhering to the Unified GCCVAT Agreement.

“Article 29 did not stipulate the imposition of taxes on electricity supply services, but on the contrary, it gave each state the right to exempt some sectors in accordance with local law. “Additionally, Article 30 stipulates the exemption of government bodies from paying taxes, and therefore it is not permissible for the authority to collect taxes.” The lawyer’s last statement came after the authority denied the accusations during the previous hearing.

“The authority does not exercise its functions as sovereign and there is no monopoly of providing electricity and water supply services in the Kingdom,” the authority’s counsel had told the court. Further supporting his accusations against the authority, Mr. Al Thawadi said: “The authority’s claim that it does not operate in a sovereign manner and that there is nothing preventing competition with it from any other party in providing its services is incorrect.

The National Bureau for Revenue held 22 workshops on the treatment of VAT thus far

Date: 04 Feb, 2019

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External URL: https://www.nbr.gov.bh/releases/28

The National Bureau for Revenue (NBR) held a total of 22 workshop on the treatment of VAT across various sectors within the Kingdom. The workshops, which have begun since December 2018, address all of the various sectors’ VAT inquiries to ensure effective implementation of VAT.

The workshops targeted government and private sector entities, including entities in the banking and finance, real estate and construction, sale and retail, auditing, and education sectors. The NBR affirms its commitment to increase public and private stakeholders’ awareness and transparency regarding the treatment of the VAT across all sectors in addition to advancing public-private cooperation.

To ensure the success of the initial phase of the VAT implementation, the NBR will organize a further series of workshops to raise awareness on the technical and procedural aspects of VAT.

VAT Public Clarification - Bank Interest and Dividends

Date: 29 Jan, 2019

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External URL: https://www.tax.gov.ae/pdf/VATP010%20Interest%20and%20Dividends.pdf

Passively earned interest income from bank deposits and dividend income are, therefore, outside the scope of VAT, and there is no requirement to report them in the VAT return.

The clarification VAT P010 primarily states that bank interest and dividends are out of scope and need not be shown as exempt income in the VAT returns. Other interest income are considered as exempt income where there Is supply Management fee is subject to VAT. Please refer to clarification for full details.

VAT Public Clarification Donations, Grants and Sponsorships

Date: 28 Jan, 2019

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External URL: https://www.tax.gov.ae/pdf/VATP011%20-%20Donation%20Grants%20and%20Sponsorships.pdf

The VAT treatment of donations, grants and sponsorships depends on whether the donor, grantor or sponsor, as the case may be, has received any benefit in return for such payments. Where any benefit is received in return for the payments, VAT implications will arise. However, where no benefit is received, the payments will be treated as outside the scope of VAT as they will not be seen as consideration for a supply.

The VATP011 clarification states where donation and grants do not have any supply, they are considered as out of scope. Generally, sponsorship will be subject to VAT as there is usually associated supply to such sponsorship. Click here to read more.

UAE clarifies when companies must de-register from VAT

Date: 26 Jan, 2019

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External URL: https://www.thenational.ae/business/economy/uae-clarifies-when-companies-must-de-register-from-vat-1.818251

Companies registered to pay value added tax in the UAE must apply to remove themselves from the system if they stop operating or anticipate a drop in the value of their taxable sales to below Dh187,500 per annum, the government said on Saturday.

Failure to de-register could elicit a fine from the UAE Federal Tax Authority, the official body that administers the tax said in a statement.

“Registrants will not be de-registered unless they have paid all due taxes and administrative penalties and filed required tax returns for the period in which they were registered, as stipulated under tax legislation,” the FTA’s statement added.

The UAE, together with Saudi Arabia, introduced a 5 per cent VAT on goods and services in January 2018, as part of plans to increase non-oil revenues and create a more transparent business environment.

Any company generating taxable sales of above the threshold of Dh375,000 per annum must register themselves on the government’s VAT system and pay all of the tax for which they are liable each year, while companies with taxable sales above Dh187,500 per annum can voluntarily register themselves to pay VAT.

However, if a company anticipates it will experience a drop in total annual sales to below that minimum threshold over a 30-day period ahead, it must de-register from VAT liability, the FTA said. The application must be submitted within 20 working days of the occurrence of that drop in sales, otherwise the company could be subject to a fine.

“Failing to submit the de-registration application within the period…will lead to the imposition of administrative penalties as stipulated in the VAT tax legislation,” the statement said.

The National Bureau for Taxation holds a workshop for audit firms

Date: 21 Jan, 2019

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External URL: https://www.nbr.gov.bh/releases/23

The National Bureau for Taxation (NBT) today held a workshop primarily aimed at increasing professional auditors’ awareness in regards to the VAT procedures and legal framework in addition to equipping them with the knowledge they need to provide accurate VAT advisory and audit services.

The workshop attracted a number of representatives from various audit firms and addressed VAT-related inquires to ensure the use of best practice in auditing.

Today’s workshop is part of a series of workshops held by the NBT aimed at increasing public and private stakeholders’ awareness regarding VAT procedures and legal framework to achieve the highest level of compliance.

The NBT reminds taxable entities to refer to the list of audit firms that can aid in the implementation of VAT, which is available on the NBT’s website at the following link: https://www.nbt.gov.bh/licenced_acc.

FTA issues guidelines for foreign businesses' VAT refund in UAE

Date: 19 Jan, 2019

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External URL: https://www.khaleejtimes.com/business/vat-in-uae/fta-issues-guidelines-for-foreign-businesses-vat-refund-in-uae

The Federal Tax Authority (FTA) has outlined four conditions that would allow foreign businesses to recover value-addded tax (VAT) incurred in the UAE.

To be eligible for the VAT refund, the first condition is that foreign businesses must not have a place of establishment or fixed establishment in the UAE or in any of the VAT-implementing GCC states.

Secondly, such foreign businesses must not be a taxable person in the UAE. Thirdly, they must also be registered as an establishment with a competent authority in the jurisdiction in which they are established; and finally, they must be from a country that implements VAT and that equally provides VAT refunds to UAE businesses in similar circumstances.

The authority clarified that the period of each refund claim shall be a calendar year, noting that for claims in respect of the 2018 calendar year, refund applications can be made as of April 1, 2019. However, for subsequent calendar years, the opening date for accepting refund applications will be March 1 of the following year; this means that for the period from January 1 to December 31, 2019, applications will be accepted as of March 1, 2020.

The FTA went on to stress that the minimum claim amount of each VAT refund application submitted by business visitors is Dh2,000, which may consist of a single purchase or multiple purchases. The Authority urged potential applicants to hold on to the original tax invoices on the purchases for which they would like to reclaim VAT, as they will be required to be submitted along with the refund applications.

The state may still submit a VAT refund application to reclaim VAT incurred in the UAE under this scheme, the FTA assured, outlining only three situations where VAT cannot be reclaimed.

The first situation is if the foreign business in question makes supplies in the UAE, unless the recipient is obliged to account for VAT under the reverse charge mechanism. Secondly, a VAT refund cannot be processed if the input tax in respect of any goods or services is “blocked” from recovery and, therefore, not recoverable by a taxable person in the UAE. The third situation where a refund is not possible is if the foreign business is a non-resident tour operator.

Khalid Ali Al Bustani, director-general, FTA, noted that this procedure reflects positively on many sectors, including tourism, trade, exhibitions, conferences, etc.

He further explained that reciprocity is a key condition for the procedure, whereby the Authority will refund the VAT to businesses resident in countries that refund VAT for UAE businesses visiting their territories.

NBT holds VAT policies workshop

Date: 17 Jan, 2019

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External URL: https://www.nbr.gov.bh/releases/22

The National Bureau for Taxation (NBT) today held a workshop aimed at increasing the awareness of registered government entities on VAT treatment and policies.

Today’s workshop attracted representatives from around 30 government entities, and provided a summary of core VAT concepts in addition to reviewing the VAT treatment and policies.

During the workshop, the NBT reminded civil servants of the Cabinet’s decision to ensure that 1,400 public services are not subject to 5% VAT, in line with the Royal Directives of HM the King to review the VAT application process during its trial period.

The NBT continues to hold an extensive series of workshops to facilitate the exchange of technical expertise and to assure the correct application of the VAT.

Over 1,300 local and international vendors registered for the VAT

Date: 16 Jan, 2019

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External URL: https://www.nbr.gov.bh/releases/21

The National Bureau for Taxation (NBT) today announced that over 1,300 local and international vendors have registered for the Value Added Tax (VAT).

• In line with NBT’s efforts to expand VAT awareness, the Call Centre has efficiently responded to over 7,000 VAT related queries.

• Consumers are reminded that all registered vendors are legally required to display their VAT registration certificate, which includes vendors’ Commercial Registration number and their VAT registration date, prior to levying the 5% VAT.

• Consumers are also encouraged to verify taxpayers’ registration status through the recently introduced Taxpayer Lookup tool accessible on https://www.nbt.gov.bh/vat/tp/ms prior to paying the 5% VAT charge.

• The NBT continues to support consumers and investors with all aspect of the VAT, and invites all stakeholders to take advantage of the information available online (www.nbt.gov.bh) and on NBT’s social media accounts (@BahrainNBT) in addition to calling and emailing the Call Centre on 80080001 or vat@mof.gov.bh for further queries.

NBT introduces a new system allowing consumers to verify vendors' VAT registration status

Date: 13 Jan, 2019

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External URL: https://www.nbr.gov.bh/releases/19

The National Bureau for Taxation (NBT) today introduced a new service that allows consumers to verify vendors’ VAT registration status through a search tool accessible on www.nbt.gov.bh.

The new system allows consumers to pull up vendors’ official registration records by searching for its VAT Registration Number, Commercial Registration Number and QR code.

This new service builds on the government’s efforts to strengthen consumer protection and transparency to further build on the success of the VAT.

The new service aims to facilitate the monitoring mechanisms during the VAT’s initial stage, and strengthen regulatory compliance.

NBT distributes tax free logos to be added to goods and services that are not subject to VAT

Date: 13 Jan, 2019

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External URL: https://www.nbr.gov.bh/releases/20

The National Bureau for Taxation (NBT) today announced that a tax exemption logo (VAT FREE) will be distributed across various establishments in order to place the logo on goods and services that are not subject to VAT. This new measure builds on the government’s efforts to strengthen consumer protection and transparency, ensuring the correct implementation of VAT.

NBT stressed the importance of the various establishments to adopt this measure, making sure the logo is clear and visible to consumers. In this regard, the NBT further stressed the importance of clearly placing the VAT certificate of registration that entitles these entities to collect VAT on products and services that are subject to it.

Cosmetic services subject to 5% VAT in UAE

Date: 13 Jan, 2019

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External URL: https://www.khaleejtimes.com/business/vat-in-uae/cosmetic-services-subject-to-5-vat-in-uae-

Healthcare services that are not basic or preventive in nature but more cosmetic are subject to the standard 5 per cent VAT rate, tax experts said.

The majority of healthcare services under the UAE VAT law have been classified as zero-rated. This effectively means that such services are subject to VAT at zero per cent but with the eligibility to recover the VAT incurred on associated costs.

“The government has a keen interest and focus on promoting the healthcare industry in the UAE. Keeping this intent in mind, the government has kept basic and preventive healthcare supply at a zero rate of VAT. But there are a lot of activities that are still subject to VAT,” said Nimish Goel, partner at WTS Dhruva Consultants, while addressing a seminar on VAT.

Research reports suggest healthcare expenditure is projected to reach in excess of $100 billion in the GCC, with the UAE playing a prominent role. It is estimated that the UAE healthcare market is projected to reach Dh71.56 billion by 2020.

Dr Ramadan AlBlooshi, CEO, Dubai Healthcare City Authority – Regulatory (DHCR), said following the introduction of VAT at the beginning of last year, the authority received enquiries about its implementation.

“We are keen to provide a platform to help stakeholders have a better understanding of VAT to facilitate compliance in the free zone,” he said.

At the seminar, WTS Dhruva Consultants also launched a comprehensive VAT guide for companies operating in the healthcare sector in the UAE. The guide, titled: “VAT on Health Care in UAE – Impact and Insights” elaborated and addressed numerous issues related to healthcare service providers, insurance companies, and related products.

Dinesh Kanabar, CEO and founder of WTS Dhruva, said the VAT guide prepared by WTS Dhruva for the healthcare sector in the UAE is first of its kind in the country.

“The guide addresses numerous issues related to the activities of healthcare service providers,” he said.

FTA clarifies VAT for independent director fees

Date: 13 Jan, 2019

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External URL: https://www.khaleejtimes.com/business/vat-in-uae/fta-clarifies-vat-for-independent-director-fees-

VAT for independent directors’ services depend mainly on whether the fees for the said directors were known from the outset or not.

The Federal Tax Authority (FTA) has confirmed that the date of supply for value-added tax (VAT) with regard to independent directors’ services is determined either in accordance with the general rules or the special rules, depending mainly on whether the fees for the said directors were known from the outset or not.

The authority said that where such fees are known from the outset, the date of supply shall be determined in accordance with the provisions of Articles (25) and (26) of Federal Decree-Law No. (8) of 2017 on VAT, depending on whether or not there will be periodic payments.

If such fees are not known from the outset, they shall be determined upon conclusion of the annual general meeting and the date of supply shall be established only when such fees become known.

The FTA explained that in instances where the board fees are known at the outset and involve periodic or multiple payments, the date of supply would be determined as per Article (26) of Federal Decree-Law No. (8) of 2017 on VAT, where the date of supply would be the earliest of the following three: The date of issuance of the tax invoice; the date the payment is due as shown on the tax invoice; and the date of receipt of payment.

If 12 months have passed from the date of provision of services and none of the aforesaid events has occurred, the date of supply will be triggered at the end of the 12th month.

As for the instances where board fees are known at the outset but there are no periodic or multiple payments, the date of supply would be determined as per Article (25) of the Federal Decree-Law No. (8) of 2017 on VAT. Accordingly, the date of supply would be the earliest of the following three: The date of issuance of a tax invoice; the date on which the provision of services was completed; and the date of receipt of payment.

UAE to be fastest growing GCC economy in 2019: IIF

Date: 09 Jan, 2019

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External URL: https://www.khaleejtimes.com/business/economy/uae-to-be-fastest-growing-gcc-economy-in-2019-iif

“Consumer inflation will ease in 2019 in Saudi Arabia and the UAE after the VAT related spike in 2018. Downward pressure from the low rental prices will persist,” IIF analysts said.

The UAE will be the fastest growing economy in the GCC region this year along with Oman, driven by non-oil sector, Dh50 billion Abu Dhabi stimulus package and projects linked to Expo 2020 Dubai, according to a new report released on Wednesday.

The Institute of International Finance (IIF) analysts projected the UAE’s real GDP to grow 3.1 per cent in 2019 compared to 2.9 per cent estimated for 2018. But growth is projected to slow down to 2.7 per cent in 2020. Nominal GDP is estimated to increase from $434 billion (Dh1.592 trillion) in 2018 to $444 billion (Dh1.629 trillion) in 2019 and $458 billion (Dh1.681 trillion) in 2020.

Taimur Khan, Research Manager, Knight Frank, said in an another UAE research that outlook for the UAE’s GDP growth in 2018 and 2019 remains positive on the back of higher oil prices, a range of stimulus packages and easing of business regulations in both Abu Dhabi and Dubai, which are likely to support activity in both the public and private sectors.

International Monetary Fund had predicted 3.7 per cent growth for the UAE for 2019 in its October forecast. While World Bank on Tuesday predicted 2 per cent in 2018 which is expected to accelerate to 3.0 per cent in 2019 and 3.2 per cent in 2020 and 2021.

According to IIF forecast, Oman’s real GDP growth is also projected at par with the UAE at 3.1 per cent for this year and 3.4 per cent in 2020. While Saudi Arabia’s real GDP is predicted to grow 2 per cent in 2019, Kuwait at 0.4 per cent, Qatar at 2 per cent and Bahrain at 2.4 per cent.

NBT call centre responds to over 1,000 VAT queries

Date: 08 Jan, 2019

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External URL: http://www.newsofbahrain.com/bahrain/50016.html

The Call Centre has successfully responded to over 1,000 VAT related queries per day through its hotline (8008001) and by email (vat@mof.gov.bh) since the induction of the VAT on January 1, 2019. The National Bureau for Taxation (NBT) noted that the sudden influx of queries reflects consumers and investors’ eagerness to expand their VAT procedural and legal framework knowledge. As a result, the NBT will increase the total number of people employed in the Call Centre to advance its customer service standards and to equip the centre with the resources it needs to manage sudden influxes.

The NBT reiterated that all its communication channels are open to further queries related to the VAT procedural or legal framework. Citizens can contact the Call Centre on 80008001 or vat@mof.gov.bh in addition to taking advantage of the information available on NBT’s website (www.nbt.gov.bh), Instagram and Twitter (@NetworkNBT).

Meanwhile, Consumers in the Kingdom have been urged to ensure that they don’t overpay for goods and services to businesses who may take advantage of the current confusion in the market and charge extra bucks for goods and services. Taking advantage of the existing confusion in the market, certain businesses may swindle the customers by charging extra and many customers are worried over being cheated in the name of VAT.

Ministry receives 224 VAT related complaints

Date: 07 Jan, 2019

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External URL: http://www.newsofbahrain.com/bahrain/49974.html

The Ministry of Industry, Commerce and Tourism (MOICT) yesterday confirmed that it has responded to a total of 224 VAT related complaints in addition to more than 1,130 VAT inquiries, since its induction on January 1st, 2019. The Ministry’s ‘Companies Control’ and ‘Consumer Protection’ directorates have successfully inspected more than 430 vendors across the Kingdom to ensure the correct application of the VAT.

The Ministry is committed to continue monitoring the movement of all goods and service in accordance with the newly published list of basic food items that are not subject to VAT, it said in a press release issued. “All sales outlets are required to comply with the Kingdom’s VAT Law and its executive regulations.” Consumers can report violations by calling 80008001, the ministry added.

The Central Bank of Bahrain (CBB) on Saturday reiterated its commitment to continue monitoring all financial institutions to ensure the correct implementation of Value Added Tax (VAT). Interest payments on loans, deposits, currencies trading, issue or transfer of ownership of securities (equities or debt), and life insurance and reinsurance contracts are not subjected to VAT, the CBB highlighted. As many as 94 goods and services have been exempted from VAT, according to authorities.

Emirates NBD launches VAT-based loan solution for SMEs

Date: 06 Jan, 2019

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External URL: https://www.arabianbusiness.com/banking-finance/410808-emirates-nbd-launches-vat-based-loan-solution-for-smes

Dubai’s largest bank Emirates NBD has launched a new VAT-based loan solution for small and medium-sized enterprise (SME) customers.

The new programme eases the lending application process for SMEs as it allows them to validate their business turnover and income by providing the bank with copies of their VAT returns filed with the UAE’s Federal Tax Authority (FTA).

“Emirates NBD’s VAT-based loan offering symbolises our commitment to the UAE’s small and medium businesses and supports the objective of Expo 2020 Dubai to foster growth of the SME sector,” said Suvo Sarkar, senior executive vice president, Head of Retail Banking and Wealth Management at Emirates NBD.

The new programme will cover home, auto and business loan products.

Bank lending remains one of the biggest challenges faced by GCC-based SMEs, where less than 5% of bank loans are dedicated to small businesses in the region. It is believed to be among the lowest in the world.

Institutions such as Mashreq Bank argued that its SME loss rate stood too high at 20%, CEO Abdulaziz Al Ghurari said at the 2017 Middle East Banking Forum in Abu Dhabi, though it is not clear whether other banks face the same rates.

Federal Tax Authority announces results, successes of first year of VAT implementation

Date: 05 Jan, 2019

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External URL: http://wam.ae/en/details/1395302730638

Khalid Ali Al Bustani, Director General of the Federal Tax Authority (FTA), asserted that in the first year of implementing Value Added Tax (VAT) in the UAE, the Authority registered many successes from deploying easy-to-use, hi-tech electronic systems to ensuring high compliance rates among businesses across the country.

The VAT system has been praised by experts and local, regional and international official bodies, he added, noting that despite the challenges that were expected at the beginning of implementation – which was a common occurrence in many countries that introduced VAT around the world – the UAE successfully rolled out a seamless and flexible tax system, complete with a progressive legislative environment that meets the highest standards in the field.

The news came in a press statement issued by the Authority to mark the first anniversary of the introduction of VAT in the UAE, which went into effect on January 1, 2018, at a 5% rate on the supply of most goods and services in the country.

“In collaboration with all concerned entities, the Federal Tax Authority set the foundations for a holistic and balanced tax system, making the UAE one of the first countries in the world to implement a fully electronic paperless tax system,” Al Bustani said. “Our advanced system encourages auto-compliance with procedures, all the while maintaining transparency and accuracy, as directed by the UAE’s wise leadership, which strives to make the UAE one of the best countries in the world by 2021.”

The FTA Director General revealed that the number of businesses that registered in the tax system during the first year of implementation exceeded 296,000 companies and tax groups, noting that the rates of compliance among Taxable Persons in the UAE are increasing remarkably. Statistics show that the total number of periodic Tax Returns received by the Authority from businesses registered for VAT purposes exceeded 650,000 in 2018, he said, adding that this high compliance rate was due to the easy procedures set for submitting Tax Returns and paying due taxes, available 24/7 via the e-Services portal on the FTA official website: www.tax.gov.ae . The platform was designed according to international best practices and provides flexible and varied payment mechanisms, as well as information and guidance to promote tax awareness.

“The Federal Tax Authority was among the 8 most searched names in the UAE on global search engine Google in 2018,” he revealed. “This demonstrates that in a short period of time, the Authority successfully became the centre of attention among large segments of society and across various sectors. It also confirms that the FTA website was among the most viewed and most interactive websites in the UAE. ”

“The FTA will continue to upgrade its integrated tax management systems, increasing efficiency and providing all facilities to ensure compliance with tax procedures and laws, designed to meet the highest international standards,” Al Bustani noted.

Blockchain can help VAT

Date: 04 Jan, 2019

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External URL: http://www.newsofbahrain.com/bahrain/49923.html

Blockchain, the revolutionary technology which has been steadily gaining popularity in recent years can greatly help in the implementation and management of VAT, according to an expert While VAT is expected to boost revenue for the government, it comes with challenges related to TAX collection as well as issues related to companies that may try to evade taxes. Both issues can be addressed with the use of VAT, says a leading IT expert.

According to Yaqoob AlAwadhi, NGN International CEO, blockchain can help facilitate tax collection without added costs of intermediaries. He said that blockchain can cut VAT administration costs by eliminating the need for third-party intermediaries: agents, escrow, trusted banks, and many others that according to him “slows down the entire transaction process”. “Blockchain is a safe and effective tool for the management of value-added tax. This technology would contribute to reducing the costs of managing Tax and accelerate its collection by 80 per cent,” he said.

He urged the government to be a pioneer in the GCC in using “Blockchain” in the collection of value-added tax, “as this technology eliminates the role of intermediaries such as accounting companies or banks between the merchant and the government.” “Blockchain speeds up government access to tax revenues from the final consumer of the service or Item, and also accelerate the process of refunding the merchant and supplier of the tax”.

VAT Refunds for Business Visitors

Date: 02 Jan, 2019

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External URL: https://www.tax.gov.ae/pdf/VAT%20Refund%20User%20Guide-Business%20Visitors_EN.pdf

Read the latest FTA guide dated Dec’18 which has been issued for Business visitors refund.

Click here to know more

Purchase of gold and jewellery now subject to VAT

Date: 01 Jan, 2019

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External URL: https://en.israelidiamond.co.il/news/retail-and-jewelry/bahrain-purchase-of-gold-and-jewellery-now-subject-to-vat/

The Kingdom of Bahrain is imposing a new VAT (value-added tax), making it the third Gulf Cooperation Council (GCC) member state to impose VAT, following the UAE and Kingdom of Saudi Arabia. The initial rate of VAT in Bahrain is 5%.

The purchase of gold and silver jewellery and the charges paid for making of the jewellery would be subject to VAT. Pearls and gemstones are, at least for now, exempt from VAT. According to Diamond World, during the last week of December “there was pre-VAT rush in gold jewellery shops” as consumers enjoyed the last days of pre-VAT prices.

As for penalties, failing to register within the required period for more than 60 days will be penalised a maximum 10,000 Bahraini Dinar ($26,527). Failing to submit a VAT return or not making a payment within the required period will be penalized between 2.5%-5% of the due tax amount.

Input Tax Apportionment: Special Methods

Date: 31 Dec, 2018

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Wef 1st Jan 2019, taxable entities can apply for the alternate method for input tax apportionment in relation to its industry.

It is not compulsory to apply for special apportionment method. However, if there are differences of Aed 250k or more in the standard apportionment method and the alternate method applicable for the industry, then the annual adjustments have to be done in the immediate return subsequent to the first tax year.

Click here to learn more.

VAT ushers in second year, carrying positive influence on economic growth

Date: 28 Dec, 2018

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External URL: http://wam.ae/en/details/1395302729470

The Value-Added Tax will usher into its second year of implementation just in a few days from now in both the UAE and Saudi Arabia, carrying forward a positive influence on economic growth in both countries, with other GCC States projected to come aboard the VAT system either in 2019 or the year after.

According to the International Monetary Fund’s forecasts, cited by a report recently issued by the Federation Gulf Cooperation Council Chambers, the introduction of VAT in the Gulf region could generate new revenue of 1.5 to 3 percent of non-oil GDP.

The report spotlighted the impact generated by the new tax and its contribution to the economic diversification efforts ongoing across the Gulf region to secure the necessary funds required to finance infrastructure projects and public services.

On the UAE, the report said VAT was introduced on 1 January 2018 at a rate of 5 percent to provide a new source of income which will be continued to be utilised to provide high-quality public services and help government move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.

According to published reports, VAT in the UAE has helped drive the economy by building different streams of income to help the country wean itself off oil.

Along with its partners across the GCC, the Kingdom of Saudi Arabia has chosen to implement a standard VAT tax rate of 5 percent effective January 2018. In line with GCC Supreme Council Resolution made in its session No. 36 on authorising the Financial and Economic Committee to complete the necessary requirements of GCC VAT Unified Agreement, Saudi Arabia approved the Agreement with a Royal Decree No. M/51. The country issued its National VAT Law with Royal Decree No. M113 and published its Implementing Regulations issued by GAZT Board of Directors Resolution No.3839.

In the meantime, the Bahrain VAT Law has been published and sets out the general principles for the application of VAT in the country. In line with the GCC VAT Unified Agreement, VAT will be implemented in Bahrain on 1 January 2019.

NBT highlights efforts to enhance consumer protection and compliance ahead of VAT induction

Date: 27 Dec, 2018

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External URL: https://www.nbt.gov.bh/releases/15

The National Bureau for Taxation (NBT) today highlighted its ongoing efforts to enhance consumer protection and compliance with the VAT law and its Executive Regulations in preparation for its induction on January 1, 2019.

The NBT has introduced various initiatives to enhance transparency and increase consumers’ awareness in regards to their rights. In this context, consumers are reminded that they are not required to register for VAT nor are they expected to go through the registration certificate procedures.

Consumers are also encouraged to make sure that shops clearly display their VAT registration certificate prior to paying the VAT.

Consumers are reminded to call 80008001 or email vat@mof.gov.bh to report any violations including levying tax on goods and service not subject to VAT or charging VAT prior to its induction.

Over 1,000 enterprises register for VAT first phase

Date: 26 Dec, 2018

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External URL: https://www.nbt.gov.bh/releases/14

The Assistant Undersecretary for Development and Policy of Public Revenues at the Ministry of Finance and National Economy, Rana Ebrahim Faqihi, today affirmed that over 1,000 local and international enterprises have begun registering for the first phase of the Value Added Tax (VAT) implementation – effective on January 1, 2019, at a standard rate of 5%.

The Assistant Undersecretary highlighted the VAT registration process, noting that 668 enterprises have already received their VAT Registration Certificate and more than 500 companies have initiated the process of registration.

The Assistant Undersecretary went on noting that the ministry’s call center is fully prepared to provide swift general and technical assistance to taxpayers. As of today, the call center has successfully responded to more than 1,500 tax-related inquires of which 90% were immediately settled by VAT experts, as well as promptly responding to more than 500 email inquiries.

Faqihi went on noting that the National Bureau for Taxation (NBT) will continue to advance its multiple communication platforms well after the VAT’s induction to ensure information is suitably accurate and to continue to provide a platform where citizens can report misconducts; such as charging VAT prior to induction and applying VAT on goods and services that are not subject to VAT.

Faqihi concluded by urging citizens to contact the call center on 80008001 or vat@mof.gov.bh for general and technical inquiries in addition to taking advantage of the information available on the NBT’s website (www.nbt.gov.bh) and the information available on Instagram and Twitter platforms

Royal directives to review VAT application mechanisms during trial period hailed

Date: 25 Dec, 2018

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External URL: https://www.nbt.gov.bh/vat_news_8

Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa hailed the Royal directives of His Majesty King Hamad bin Isa Al Khalifa to review the VAT mechanisms during the trial application period and observe the citizens needs through the exemption of basic commodities and services.

The Ministry of Finance and National Economy as well as the governmental entities concerned with the application of VAT will implement the Royal directives by ensuring the soundness of application procedures from day one of the trial period while taking into consideration the importance of market stability and the steady and smooth supplies of commodities and services to the citizens and residents to ensure the continuity of development and growth of the sectors whilst ensuring the citizens’ needs, he said.

This came during the meeting held at the Ministry of Finance and National Economy premises in the presence of Industry, Commerce and Tourism Minister Zayed bin Rashid Alzayani and Bahrain Chamber of Commerce and Industry (BCCI)’s deputy chairman Khalid Najibi.

Shaikh Salman stressed the importance of continuous communication, consultation and discussion with the Bahrain Chamber of Commerce and Industry regarding the VAT mechanisms. He cited the ongoing cooperation and discussion of viewpoints to reach the results that would serve the aspirations in the interest of the homeland and the citizen foremost.

Taxpayers in UAE and Saudi Arabia: Get ready for official tax audits in 2019

Date: 25 Dec, 2018

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External URL: https://www.thenational.ae/business/economy/taxpayers-in-uae-and-saudi-arabia-get-ready-for-official-tax-audits-in-2019-1.806213

Taxpayers in the UAE and Saudi Arabia will have to brace themselves for official audits next year as the roll-out of the 5 per cent VAT since January 1 this year overcomes a number of hurdles and teething problems.

Now that regulations are in place, taxpayers are expected to prepare for audits by the UAE’s Federal Tax Authority and Saudi Arabia’s General Authority of Zakat and Tax next year. It is an exercise that will test their resources and the accuracy of record keeping as well as the filing of tax returns.

The two states were the first countries in the Arabian Gulf to introduce the levy following the implementation of excise taxes on energy and fizzy drinks and cigarettes in 2017.

“In the UAE and Saudi Arabia, next year there will be a lot of full-scale tax audit activity undertaken on businesses,” said David Stevens, GCC VAT

Implementation Partner at advisory EY.

“These businesses need to prepare themselves to be able to completely justify all of their numbers, all of their data, all of their statements, all of their payments, all of their invoices, all of their record-keeping, and all various other aspects of their VAT compliance that will come under increased scrutiny by the authorities as we go into the second year of operation.”

GCC countries are introducing taxes to cope with the crash in Brent oil prices from more than $115 per barrel in mid-2014 to around $50 per barrel currently.

The International Monetary Fund estimated that the introduction of VAT in the region could generate new revenue of 1.5 to 3 per cent of non-oil GDP.

Bahrain will be the third country to introduce the levy on January 1, 2019, but it plans to introduce a more complex system that has a lot of items exempt from VAT amid a lack of clarity over many aspects of the regulations.

Meanwhile, in the UAE and Saudi Arabia, the tax authorities – which toiled in 2018 to clarify ambiguities about VAT rules and regulations – will need to continue this exercise into 2019 as they begin to conduct tax audits.

“The authorities will be launching audit activity while there are some areas with unclarified rules, so they won’t know how to enforce them,” said Mr Stevens.

“The pressure falls on the authorities to resolve any unsettled, non-clarified or disputed areas of interpretation. They need those clarified so that auditors can do their job and taxpayers need that to make sure they are fully compliant.”

Companies in 2018 struggled to be compliant for various reasons. Some waited too long, some did not expect the levies to be introduced, while others changed their processes to comply, but their work was dogged by mistakes.

Finance Ministry committed to ensuring transparency, consumer protection in VAT implementation

Date: 22 Dec, 2018

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External URL: https://www.nbt.gov.bh/vat_news_6

The Assistant Undersecretary for Development and Policy of Public Revenues at the Ministry of Finance and National Economy (MoFNE), Rana Ebrahim Faqihi, affirmed the Ministry’s commitment to increasing consumers and businesses’ awareness about the VAT procedures and legal framework, in line with the VAT Law and its Executive Regulations, underscoring the Ministry’s commitment to strengthening consumer protection and transparency.

Faqihi added that the Ministry of Finance and National Economy and the National Bureau for Taxation have dedicated resources towards raising VAT procedural and legal framework awareness, including an extensive series of workshops for business owners and companies that will be subject to the VAT, in addition to directly communicating with businesses to ensure effective and seamless implementation of VAT on January 1, 2019.

The Assistant Undersecretary noted that all registered businesses are required to display their VAT registration certificate, which includes the business’s Commercial Registration number and the VAT registration date, in a prominent place that is clearly visible to consumers prior to levying the 5% VAT, to avoid violations.

The Assistant Undersecretary stressed that all registered businesses are also legally required to display the final prices of all goods and services – inclusive of tax before any sale.

The Assistant Undersecretary went on noting that it is a violation to mislead consumers.

The Assistant Undersecretary concluded by highlighting NBT’s efforts towards establishing multiple communication channels including the hotline 80008001, establishing the email vat@mof.gov.bh, as well as detailing VAT information uploaded on NBT’s recently launched website www.nbt.gov.bh

Event in Bahrain on VAT implementation regulations and VAT challenges

Date: 21 Dec, 2018

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External URL: https://www.linkedin.com/feed/update/urn:li:activity:6481849111883677696

Bahrain Chapter-The Institute of Chartered Accountants of India in association with MCA Pyramid Consulting hosted a successful event on VAT implementation regulations and VAT challenges. A session on Supply chain Digitization was also conducted. Excom members with speakers Mr Girish Chand, Mr Ashish Chakravarti. Thank you to the speakers, MCA Pyramid consulting and, CA Lakshmanan R

Vat event in Bahrain by MCA Pyramid and the Institute of Chartered Accountants of India

Saudi Arabia collects twice as much VAT as expected in 2018- budget document

Date: 18 Dec, 2018

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External URL: https://www.reuters.com/article/saudi-budget-tax/saudi-arabia-collects-twice-as-much-vat-as-expected-in-2018-budget-document-idUSB2N1YE016

Saudi Arabia collected 45.6 billion riyals ($12.16 billion) from value-added tax (VAT) in 2018, more than double its initial estimate, budget documents showed.

The Saudi budget expects total tax revenues of 166 billion riyals this year, up from an initial estimate of 142 billion riyals, the document showed.

The Saudi government has said it expects VAT, which was introduced earlier this year, to be one of the main generators of non-oil revenue. ($1 = 3.7507 riyals) (Reporting by Stephen Kalin and Marwa Rashad; Editing by Gareth Jones)

Professional services firm MCA expands to Bahrain ahead of VAT launch

Date: 14 Dec, 2018

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External URL: https://www.consultancy-me.com/news/1643/professional-services-firm-mca-expands-to-bahrain-ahead-of-vat-launch

Indian-founded professional services firm MCA, which offers a broad range of services covering the spectrum of accountancy, audit and assurance, international taxation, and technology and business management consulting, has on the eve of the VAT roll-out in Bahrain expanded from its current bases in the UAE and Oman to launch a new office in the Kingdom – MCA Bahrain.

The new venture has been launched in partnership with fellow Dubai-based professional services firm Pyramid Specialized Management Consulting (to operate under the legal name MCA Pyramid Consulting WLL), and will offer services in taxation, governance, risk and compliance, transaction advisory, supply chain, corporate services and business strategy among other areas.

Founded in India in 2008 by current Chairman T. N. Manoharan, MCA launched its Dubai arm the following year and has since grown to include further offices in Abu Dhabi, Sharjah and Muscat with a team of more than 75 employees and an established regional client base upwards of 600 to date. The Middle East branch is led by Managing Director Mannem Hanumantha Kumar.

The launch in Bahrain has been timed to coincide with the local VAT roll-out, scheduled to be implemented locally in the Kingdom from the start of next year following its earlier introduction in Saudi Arabia and the Emirates (the remaining GCC have committed to follow), with MCA to offer its expertise on VAT impact assessment, implementation, registration and compliance.

“With introduction of VAT in Bahrain, the decision to expand and open a new office was a logical step in our business growth strategy and it will strengthen our comprehensive basket of service capabilities in the region,” Manoharan said at the launch ceremony. “Further, it would improve transparency and compliance in general and have a positive impact on country rating.”

Also in attendance at the launch party in Manama were MCA Bahrain founding partners Kumar and S Venkatesh (MCA managing partner) and Pyramid founder and managing director R Lakshmanan, a former auditor for KPMG in Bahrain who established Pyramid in 2014 to specialise in housing finance, real estate, Islamic finance, and strategic advisory among other areas.

“We are delighted to launch operations in Bahrain in the 10th year of MCA, UAE. With significant expertise developed from VAT implementation in the UAE, MCA Bahrain is better positioned to cater to demand for VAT related services,” said Venkatesh. Lakshmanan added; “We have made a long-term commitment to this market and delighted to launch in Business-Friendly Bahrain.”

Both Kumar and Venkatesh have both previously served as the Chairman of the Dubai Chapter of the Institute of Chartered Accountants of India (ICIA), a role also held over time by esteemed sector leaders such as Deloitte partner Abbas Ali Mirza, BDO Patel & Al Saleh founder Russi J Patel, and Group CEO (UAE and Oman) of Crowe Mac and Crowe Global board member James Mathew.

Phase 2 of tourist VAT refund scheme rollout from Dec 16

Date: 13 Dec, 2018

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External URL: https://www.khaleejtimes.com/business/vat-in-uae/phase-2-of-tourist-vat-refund-scheme-rollout-from-dec-16-

The Federal Tax Authority (FTA) on Wednesday said all preparations were complete to launch phase 2 of the Tax Refunds for Tourists Scheme from Sunday, December 16. The scheme would cover 12 air, land and sea ports across the UAE.

The first phase went into effect on November 18, 2018, covering the Abu Dhabi, Dubai and Sharjah international airports.

The second phase will cover Al Ain International Airport, Al Maktoum International Airport and Ras Al Khaimah International Airport; as well as 2 sea ports: Zayed Port in Abu Dhabi and Port Rashid in Dubai; and 4 land ports: Al Ghuwaifat Border Post in Abu Dhabi, Hili Border Port and Al Madheef Border Crossing in Al Ain, and Dubai’s Hatta Border Exit.

“The FTA coordinated with the system operator Planet, running all necessary experiments to ensure the scheme is implemented smoothly and accurately,” said Khalid Ali Al Bustani, director-general of FTA.

Al Bustani projects daily refunds of value-added tax (VAT) to grow quickly in the coming period. The number of refund requests processed surpassed 3,800 daily transactions.

The FTA asserted that to be refundable, tax invoices must be issued by retail stores included in the scheme and registered in the system; these venues can be identified by visibly showcasing ‘tax-free’ stickers on their storefronts.

The FTA had outlined conditions for a tourist to be eligible for a tax refund, namely: The tourist in question is at least 18 years old; goods eligible for the scheme are supplied to an overseas tourist who was on UAE soil when the purchase was made, and who intends to exit the UAE along with the purchased items within 90 days; goods must be exported out of the UAE by the tourist within 3 months of the date of supply.

Finance Ministry highlights VAT exemptions

Date: 13 Dec, 2018

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External URL: https://www.nbt.gov.bh/vat_news_4

The Assistant Undersecretary for Development and Policy of Public Revenues at the Ministry of Finance and National Economy, Rana Ebrahim Faqihi, highlighted that the 5% Value Added Tax (VAT) will not be applied on 94 basic foodstuffs in addition to essential sectors such as education, health, real estate, oil and gas among other important sectors.

Bahrain’s National Bureau for Taxation, the entity responsible for tax administration and collection according to Law and regulations, launched a new website (www.nbt.gov.bh). The website provides more information to taxpayers and collectors on the Kingdom’s newly introduced VAT and its registration process. Bahrain’s VAT Law will be implemented starting Jan 1st 2019, in line with the unified VAT agreement approved by the Gulf Cooperation Council at the Riyadh Summit in 2015.

Saudi Arabia & Bahrain VAT deadlines fall in December

Date: 11 Dec, 2018

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External URL: https://www.out-law.com/en/articles/2018/december/saudi-arabia-and-bahrain-vat-deadlines-fall-in-december/

VAT will also come into effect in the Kingdom of Bahrain with effect from 1 January 2019, with an obligation for some businesses to register in December 2018.

Small businesses whose obligation to register for VAT in the Kingdom of Saudi Arabia (KSA) was deferred under transitional provisions will have to submit an application for registration by 20 December 2018. In addition transitional arrangements which meant that VAT did not have to be paid in respect of existing contracts come to an end on 31 December, meaning that contract prices may need to be renegotiated.

VAT was introduced in the KSA with effect from 1 January 2018.

Appreciating the challenge facing businesses in the region, the minister of finance Mohammed Al-Jadaan, together with the board of the General Authority on Zakat & Tax (GAZT), approved the inclusion of transitional provisions in the VAT Implementing Regulations in September 2017. Two of these transitional provisions may now require action by businesses.

Under KSA VAT rules, any person whose annual value of taxable supplies exceeds or is expected to exceed the mandatory registration threshold of SAR375,000 ($100,000) is required to register for VAT with GAZT within 30 days.

However, if the annual value of their supplies does not exceed SAR1 million ($267,000) the transitional rules provided relief from registration in advance of 1 January 2018. The rules defer the effective date of registration for these businesses to 1 January 2019, but the application for registration has to be submitted by 20 December 2018.

“To allow sufficient time to gather the necessary information and documentation for the registration application, together with the time it may take for GAZT to process your application, it is important that businesses affected by this transitional provision, who have not already voluntarily registered, start the process as soon as possible,” Joanne Clarke said.

Key VAT issues in spotlight

Date: 06 Dec, 2018

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External URL: http://www.gdnonline.com/Details/444482/Key-VAT-issues-in-spotlight

The Bahrain British Business Forum (BBBF) and BDO hosted a meeting at the Gulf Hotel Convention Centre to discuss the upcoming introduction of VAT in Bahrain. The meeting featured BDO Bahrain’s VAT specialists Smita Roy, BDO Partner (leader VAT), and Marlon Appleton, BDO senior manager (VAT), as guest speakers.

More than 130 BBBF members were given a presentation by Ms Roy and Mr Appleton, who provided latest information from the Finance Ministry about the implementation of VAT in Bahrain on January 1, 2019. They also shared their experience from the implementation and practice of VAT in Saudi Arabia, the UAE and the UK.

Ms Roy said: “With the VAT implementation just weeks away, it is critical for businesses in Bahrain to understand that VAT will impact every aspect of business from transactions, processes, documentation to people; and it is vital they be ready and prepared for the change. While this indirect tax system is new to Bahrain, VAT regime has been in place in various countries for quite some time and BDO’s VAT experts with their rich experience can provide comprehensive support to companies in navigating the VAT journey in Bahrain.”

“To avoid many of the pitfalls experienced by businesses in Saudi Arabia and the UAE, it is important for businesses to have an action plan for VAT readiness to ensure smooth transition to VAT. The readiness measures should be effectively deployed to avoid last minute chaos,” added Mr Appleton.

Federal Tax Authority: Profit Margin Scheme applies only to used cars already subjected to VAT

Date: 03 Dec, 2018

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External URL: http://wam.ae/en/details/1395302724911

The Federal Tax Authority (FTA) has announced that only those goods which have previously been subject to VAT before the supply in question may be subject to the Profit Margin Scheme. As a result, stock on hand of used goods which were acquired prior to the effective date of Federal Decree-Law No. (8) on Value Added Tax (VAT law), or which have not previously been subject to VAT for other reasons, are not eligible to be sold under the profit margin scheme. VAT is therefore due on the full selling price of such goods.

The Authority had clarified the above to address questions from the audience at an awareness session recently organised at the Abu Dhabi Chamber of Commerce and Industry to raise awareness among car dealers about the procedures and tax treatment for this vital sector, as well as the efforts made by the FTA to remove obstacles facing those working in the sector.

The session brought together several car dealers, experts and other stakeholders from the industry, where the FTA team introduced them to the procedures for implementing VAT and the Profit Margin Scheme.

In a press statement issued today, FTA Director-General Khalid Ali Al Bustani asserted that the Federal Tax Authority has been committed, since the tax system went into effect, to raising awareness among all business sectors to abide by their tax obligations, by means of various media and digital channels, as well as direct contact through awareness campaigns across all seven emirates. The Authority also provides various tax awareness instruments through its website, which was designed according to international best practices.

“The Federal Tax Authority is committed to enhancing its partnerships with business sectors and providing assistance for them to fully comply with tax regulations,” Al Bustani said. “The Authority maintains constant communication with retailers, producers and service providers to identify their views and ensure a smooth and seamless implementation of the UAE tax system with minimal effects on their business activities.”

VAT backlash blow to MPs’ re-election

Date: 28 Nov, 2018

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External URL: http://www.gdnonline.com/Details/443137/VAT-backlash-blow-to-MPs%E2%80%99-re-election

A PUBLIC backlash against the previous parliament, fuelled by anger at the imminent introduction of Value Added Tax (VAT), has been credited with dashing the hopes of 13 MPs seeking re-election.

Of 23 incumbent MPs who ran for parliament again this year, only two successfully defended their seats in the first round of voting on Saturday – Adel Al Asoomi and Isa Al Kooheji.

Thirteen of them were dumped outright by voters, while eight face a second-round run-off this weekend.

The cull is an indication of widespread dissatisfaction at parliament’s performance during the past four years.

However, 27 MPs who supported the introduction of VAT in January were singled out for criticism – both ahead of the election and on election day itself.

Influential social media accounts posted the names and pictures of those who voted in favour of VAT as part of a campaign encouraging voters not to support them again.

Pictures and messages reminding people were also circulated on the day of the election on Saturday.

“The public is upset and angry,” explained political analyst Fareed Ghazi, a lawyer who served in parliament between 2002 and 2006.

“People don’t want MPs who imposed taxes on them, didn’t secure compensation or financial benefits and even tightened restrictions on political and human rights.

“Voters today are extremely intelligent and have strong opinions.

“This translated into the outcome of the first round of the election.”

Seventeen of the 27 MPs who last month voted in favour of VAT tried to defend their seat.

Large firms must register for VAT before January 1st

Date: 28 Nov, 2018

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External URL: http://www.gdnonline.com/Details/443255/Large-firms-must-register-for-VAT-before-January-1st

Companies in Bahrain with sales exceeding BD5 million annually must register with tax authorities before January 1, ahead of the rolling out of Value Added Tax (VAT).

The announcement was made today by Finance Ministry Assistant Under-Secretary for

Development and Revenue Policies Rana Faqihi.

She said VAT of five per cent would be rolled out in a phased manner, starting with companies exceeding annual sales of BD5m.

They should register with the National Bureau for Taxation (NBT), the entity in charge of managing the tax, before January 1.

A series of briefings will also be held to ensure businesses are ready for the first phase of VAT.

An NBT hotline has been set up for VAT enquiries on 80008001, or people can e-mail vat@mof.gov.bh.

Ninety-four basic foodstuffs and other basic goods and services are exempt from VAT, in addition to a number of other goods and services including education and health services.

Economy, VAT dominate discussions among voters in Bahrain’s local elections

Date: 21 Nov, 2018

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External URL: http://english.alarabiya.net/en/business/economy/2018/11/21/Bahrain-gears-up-for-local-elections-with-economy-VAT-key-issues-among-voters.html

As Bahrain gears to hold its fifth parliamentary and municipal elections, the impending implementation of Value-Added-Tax and rising inflation rate are driving discussions between candidates and voters across the island-kingdom.

The general elections for the lower house of parliament and the municipality council will be held on November 24 with many districts expecting to hold a run-off vote on December 1 as independent and past Members of Parliament are expected to fight incumbents for their seats.

But a key issue across the governorates is the topic of VAT and how it may affect constituents in the coming year. Bahraini legislators approved a draft law on October 7 that would impose VAT for the first time in the kingdom, starting from 2019. Saudi Arabia and the United Arab Emirates are the first two countries introducing VAT at a 5 percent rate, as part of a Gulf Cooperation Council (GCC) agreement in 2018.

New entity to handle tax refunds at Dubai airport

Date: 19 Nov, 2018

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External URL: http://www.gdnonline.com/Details/431728

Planet, a new entity recently appointed by the UAE’s Federal Tax Authority (FTA) will operate the Tourist Refund Scheme (TRS) at Dubai International (DXB), said a statement from Dubai Airports.

This closely follows the recent announcement by the FTA, outlining conditions and procedures for tourists to claim their Value Added Tax (VAT) refunds when exiting the country.

A ‘Tax Free Tag’, generated whilst shopping with the required passport or GCC ID, must be attached to the sales receipt upon purchase in-store. Prior to check-in the customer will then need to validate the Tax Free Tag and goods at one of the Planet validation points situated across DXB’s three terminals.

Upon successful validation, the tourist is offered a choice of refund via credit card or cash. Those customers who prefer a cash refund can have it processed at one of the Travelex outlets in the airport’s airside departure areas.

Dh10,000 cap on daily VAT refund for tourists

Date: 13 Nov, 2018

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External URL: https://www.pressreader.com/uae/gulf-news/20181113/282338270899709

The maximum value added tax (VAT) refund that can be given to a tourist in a 24-hour period has been capped at Dh10,000, according to Decision No 2 of 2018 issued by Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance, and Chairman of the Board of the Federal Tax Authority (FTA).

The decision also stipulates that tax cannot be refunded under the scheme unless the total value of tax inclusive purchases issued by the same taxable person is Dh250 or more.

The decision comprises seven clauses and stipulates that VAT refund claims shall be provided by retailers participating in the tax refunds for tourists as of November 18.

An overseas tourist may get a refund at the Abu Dhabi, Dubai and Sharjah International airports as of next Sunday. The tourists may also recover VAT at the other airports, land and seaports in the UAE as of December 16.

The decision outlined the five steps that retailers must follow when a customer asks to make a purchase under the scheme, including age and identity verification.

Click here to know more about FTA Decision No 2 of 2018 on Tax Refunds for Tourists Scheme

Verify that used cars were subject to VAT, says FTA

Date: 06 Nov, 2018

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External URL: https://www.khaleejtimes.com/verify-that-used-cars-were-subject-to-vat-says-fta

The Federal Tax Authority (FTA) has called on retailers to verify that used cars were subject to the value added tax (VAT) before applying the Profit Margin Scheme, during an awareness workshop for car dealers.

The workshop applauded the high tax compliance rate and increased tax awareness among businesses in the automotive sector, and reiterated its commitment to empowering businesses. The authority also introduced various procedures and tax treatment for the key sector, highlighting the FTA’s steps to address any obstacles that businesses face. More than 100 dealers, experts and stakeholders participated in the workshop, which was organised by the FTA in collaboration with the Dubai Municipality and Al Aweer Auto Market in Dubai.

“Tax laws in the UAE have prioritised the establishment of an environment conducive to continued growth and prosperity in commercial activities – a sector of great importance in the government’s plans to diversify sources of income,” FTA director-general, Khalid Ali Al Bustani, asserted.

The FTA experts presented a detailed explanation of the procedures and legalities surrounding VAT on the sale of new and used vehicles. They also shed light on the Profit Margin Scheme, its terms and conditions, the supplies eligible for it, and the obligations for the Taxable Person.

The authority’s representatives asserted that according to Federal Decree-Law No. (8) of 2017 on VAT and Cabinet Decision No. (52) of 2017 on the Executive Regulations of said Decree-Law, the Profit Margin Scheme is only applicable to supplies that already incurred VAT prior to the current supply. Therefore, the stock of used goods purchased before Federal Decree-Law No. (8) of 2017 went into effect (or that didn’t incur tax for any reason) do not qualify for the Profit Margin Scheme, and VAT is instead calculated on the items’ full price.

How VAT in Bahrain impacts neighbouring GCC countries

Date: 05 Nov, 2018

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External URL: https://www.khaleejtimes.com/business/economy/how-vat-in-bahrain-/impacts-its-neighbours

Value-added tax, being all pervasive, impacts a country’s economy as well as the industries therein. Furthermore, VAT impact also spills over to the import and export of goods and services. The UAE, all along, has business ties with Bahrain through either a local presence in Bahrain (as branch or local entity) or through export/import of goods or services.

Typically, after the introduction of VAT in a country, businesses discover that their entire business ecosystem – i.e., their vendors, suppliers and customers located in and outside the country – are also part of their business. Underlying reason for this tectonic shift is the fact that in VAT, businesses cannot take unilateral decisions and have to take decisions bilaterally as a buyer can debate on the applicability of VAT (for example, whether the transaction qualifies as ‘export’ or not).

Outbound transactions

As mentioned above, dependency between the supply chain intensifies, particularly, in cases of outbound supply of goods (like goods being supplied to Bahrain from the UAE).

Typically, in such transactions there are two aspects to be vetted, one whether the supply qualifies as export from UAE and whether the transaction qualifies as import in Bahrain. Thus, it is advisable for UAE entities having business interests in Bahrain to initiate early dialogue on the likely impact to identify possible issues and documentation requirements to avoid VAT debates/disputes with customers.

Import of goods

Typically, VAT is payable at the time of import of goods (unless facility of deferment is provided) along with customs duty.

Thus, after introduction of VAT, imports in Bahrain may attract VAT and thus, at the time of import itself it will be critical to determine the applicability of VAT on goods being imported in Bahrain (as certain goods such as specified medicines may not attract VAT). Also, procedural aspects like declaration of the VAT registration number on import documents, linking of the VAT number with customs, etc, also become critical during transition.

UAE businesses told to keep tax data confidential

Date: 04 Nov, 2018

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External URL: https://www.khaleejtimes.com/business/vat-in-uae/uae-businesses-/told-to-keep-tax-data-confidential

The Federal Tax Authority (FTA) has called on businesses registered for tax purposes not to disclose their financial or tax data to any person or organisation that is not officially authorised to deal with such data.

The authority stressed in a statement issued on Saturday that it is necessary to remain vigilant about messages received via e-mail or mobile phone and not to share tax registration numbers (TRN) or financial account numbers with any entity.

It urged all registered businesses to maintain the confidentiality of their data, noting that it did not authorise any entity to request tax-related financial or accounting information or any other matters relating to tax registrants.

Businesses registered with the Authority for tax purposes can submit their tax returns within the deadline and pay taxes due for specific tax periods by visiting the e-Services portal on the FTA website – eservices.tax.gov.ae – available 24/7, accessing the tax return form, entering the data, then pressing ‘submit’. Users can then proceed to pay their due taxes by clicking on the ‘My Payments’ tab.

UAE gold retailers pin hopes on VAT refund for tourists

Date: 01 Nov, 2018

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External URL: https://gulfnews.com/business/sectors/retail/uae-gold-retailers-pin-hopes-on-vat-refund-for-tourists-1.2296427

Dubai: The UAE’s gold and jewellery sector endured its toughest quarter ever between July to end September, with demand dropping to 6 tonnes, a 13 percent decline from Q3-17, according to the latest update from the World Gold Council. Some of the “retailers registered losses for the first time”, the report adds.

“One cannot remember a quarter that has been this tough, at least not in recent memory,” said John Mulligan, Head of Member and Market Relations at WGC.

But the imminent introduction of VAT refunds for tourists could provide some much needed relief, according to jewellery industry sources here. “That (tax refunds) would be key to recovery – tourist-related buying of gold and jewellery in the UAE is down 30 percent in the year to date,” said Abdul Salam K.P., Executive Director at Malabar Gold & Diamonds and board member on the Dubai Gold and Jewellery Group.

KPMG in Bahrain Discusses the Implications of Bahrain Introducing VAT From Next Year

Date: 30 Oct, 2018

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External URL: https://www.albawaba.com/business/pr/kpmg-bahrain-discusses-implications-bahrain-introducing-vat-next-year-1206678

Around 200 senior executives from the Bahrain business community attended today a session organized by KPMG in Bahrain to jointly discuss the recently published VAT Law, the implications and consequences the new tax will have across the main economic sectors of the Kingdom. Being 60 days away from VAT implementation in the Kingdom of Bahrain, the half-day event was an ideal platform for delegates to discuss and understand the type of changes they need to make to comply with the new tax environment.

Philippe Norré, Partner and Head of Tax & Legal at KPMG in Bahrain and Ali Al Mahroos, Senior Tax Manager at KPMG in Bahrain were the keynote speakers. During the event, they reviewed practical steps companies must take in the next few weeks to be VAT ready in time. There were lessons to be learnt from the United Arab Emirates and the Kingdom of Saudi Arabia but in particular the very specific Bahrain environment and the specifics of the Bahrain system were reviewed against actions required.

“VAT will not impact the business itself, but it will change how companies administer their business. VAT does not need to be only a burden and risk to businesses but it can also be an opportunity for better processes, optimization of systems, introduction of technology for tax and better risk management.

Federal Tax Authority’s Board of Directors adopts budget for 2019

Date: 29 Oct, 2018

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External URL: http://wam.ae/en/details/1395302716698

The Federal Tax Authority’s, FTA, Board of Directors today held its sixth meeting, chaired by H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance, held at the Ministry of Finance premises.

During the meeting, the Board adopted the FTA’s proposed budget for 2019, in addition to a number of executive decisions regarding the authority’s internal regulations, policies and operations.

Furthermore, the Board discussed a detailed report outlining the FTA’s achievements over the past period, as well as the latest developments with regards to the authority’s activities, the registration process for Value Added Tax, VAT, and Excise Tax, import declarations, Tax Returns on Excise Tax and VAT, and audit procedures. The report revealed a high rate of tax compliance in the UAE.

Sheikh Hamdan commended the authority for the continued progress of its systems, confirming that the FTA has successfully strengthened its partnership with the private sector, providing all necessary facilities to ensure self-compliance with tax regulations in a seamless manner supporting economic activities.

Meeting with Thattai Hindu Merchants Community (THMC)

Date: 14 Dec, 2018

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Meeting with members of Thattai Hindu Merchants Community (THMC), Kingdom of Bahrain and talk about implications of VAT on their businesses. A well organized and excellent event participation by Bhatia businessmen and businesswomen.