Welcome to the September edition of our Tax Newsletter, bringing you recent news and developments. Countries continue to reform their tax systems with the goal of becoming more globally competitive. While striving to meet international standards, it is important to remain informed about trends and developments. In our September issue, we cover GCC tax updates and international tax developments.
1) UAE: DMCC introduces dual licensing scheme
After the introduction of a dual licensing regime by several free trade zones (FTZ) in the UAE, Dubai Multi Commodities Center (DMCC) has also partnered with the Department of Economic Development (DED) to introduce a dual licensing scheme. This initiative allows companies in DMCC to operate within the FTZ as well as on the mainland, provided a no objection certificate has been obtained from DMCC followed by an approval from the DED.
DMCC houses approximately 15,000 member companies and contributes more than 10% to Dubai’s GDP.
In addition to carbonated drinks, energy drinks and tobacco and tobacco products, the UAE Cabinet has now extended the levy of excise tax to:
Sweetened drinks include any product that is produced in any of the following forms to which sugar or other sweetener is added:
A specific exclusion has been provided to the following products:
The Cabinet Decision also defines sugar, sweetener and milk substitutes.
Excise tax on the new category of excise goods is likely to come into effect before 1 January 2020. The date of implementation will be announced through a separate Ministerial Decision.
3) Bahrain: Release of updated real estate VAT guide
An updated version of the real estate VAT guide has recently been released by the National Bureau for Revenue (NBR) in Bahrain following its first release in February 2019. The new version of the guide provides additional guidance on the treatment of VAT on land reclamation, ready-mix concrete, application of zero-rate of VAT on specific transactions and apportionment of cost for zero rating and standard rating on extension of a building. Also included in the updated guide is the extended list of transactions that are not treated as exempt supplies of real estate.
4) Bahrain: Introduction of Wage Protection System (WPS)
In line with other GCC countries, Bahrain is expected to implement the WPS in September 2019 (date to be confirmed). The WPS mandates employers to pay salary via bank transfer and will alert the government of delayed or non-payment of salary.
5) Qatar: Online tax portal expected to go live soon
The General Tax Administration (GTA) is expected to launch a new online tax portal, called ‘Dhareeba’, soon. The current online tax portal only provides support with selected matters and still requires manual submissions.
Dhareeba is intended to eliminate the need for manual submission of taxes by allowing taxpayers and their tax agents in Qatar to do tax registrations, tax filings and complete various applications with the GTA online.
6) Saudi Arabia: Significant advantages introduced for bonded zones and bonded warehouses in KSA
The Saudi Arabian General Authority of Customs has recently published new regulations for the establishment and operation of bonded zones and bonded warehouses in the KSA, in accordance with the provisions of the GCC Common Customs Law. These regulations offer a beneficial customs regime including a lower duty bill, improved cash flow and streamlined import/export procedures.
1) OECD: Update on second peer review for:
The OECD recently released the outcome of the second phase of peer review for BEPS Action 13 dealing with country-by-country reporting initiative and BEPS Action 14 dealing with tax dispute resolution under MAP.
As per a press release issued by the Office of the U.S. Trade Representative (USTR) on 23 August 2019, the President has directed the USTR to increase tariffs by 5% on Chinese imports which are currently worth approximately USD $550 billion.
1) MESA Tax Guide – An overview of tax systems in the Middle East and South Asia region
There have been several recent changes in the MESA region’s tax and regulatory regimes. Please click on the link to download the MESA Tax guide
2) UK HM Revenue & Customs (HMRC) increasing focus on transfer pricing and profit diversion compliance reviews
HMRC has recently issued notices to many multi-national enterprises as it gears up to challenge more transactions and structures with a UK presence. Please click on the link to download a report prepared by the KPMG member firm in the UK.
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