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Welcome to the October edition of our tax newsletter, bringing you news regarding global and regional tax developments.

KPMG: International Covid-19 tax developments

KPMG reports on tax developments in response to the coronavirus:

  • Read updates from KPMG’s Global Tax and Legal Covid-19 hub here.
  • Find an overview of jurisdictional tax measures and government relief measures, as reported by KPMG member firms, in response to Covid-19 here.
  • KPMG's daily update on global tax developments in response to Covid-19 may be found here.

 

Events

Webcast on Wednesday, 4 November 2020

Global Indirect Tax Advisor Series Eighth Session: Environmental Taxes - Driving Green Behavior

For more details and for registration, click here.

 

Webinar on Wednesday, 4 November 2020

KPMG Webinar– Real Estate Transaction Tax (RETT)

For more details and for registration, click here

International updates

The OECD published Pillar One and Pillar Two Blueprints of the BEPS 2.0 Project

The OECD has published Blueprints on Pillar One and Pillar Two on 12 October 2020, and with them a suite of accompanying materials including an economic impact assessment and the OECD’s report to the G20 Finance Ministers and Central Bank Governors.

The OECD/G20 Inclusive Framework has invited input from stakeholders on the Blueprints and has published a public consultation document that sets out a series of questions for each of the Pillars to help focus input. Written comments need to be submitted by 14 December 2020 and a public consultation meeting will be held virtually in mid-January 2021.

The 137 members of the Inclusive Framework have worked on a global solution to address the challenges that come with globalization and digitalization. The fundamental features of the international income tax system, such as the traditional notions of permanent establishment and the arm’s length principle (ALP), need to be revisited to ensure higher levels of tax certainty through more extensive multilateral tax co-operation. No agreement has been reached yet, but the OECD maintains that they are working towards a successful conclusion of discussions on both Pillars by mid-2021.

For more details, see the KPMG update here.

For a KPMG report on the Pillar One Blueprint, see here.

For a KPMG report on the Pillar Two Blueprint, see here.

GCC updates

The United Arab Emirates (UAE)

UAE Ministry of Finance releases templates for Economic Substance notification and report

On 22 October 2020, the UAE Ministry of Finance (MoF) published templates for filing notifications and reports under the UAE Economic Substance (ES) Regulations.

After the release of the new UAE ES Regulations, all UAE businesses, including those that had earlier filed the ES notifications by 30 June 2020, are now required to file, or re-file, notifications through the MoF’s dedicated portal. While the ESR portal is yet to be launched, the MoF has published templates for re-filing such notification and the ES report required to be filed within 12 months following the end of the licensee’s financial year (first report due by 31 December 2020 for the financial year that ended on 31 December 2019).

For more details, see the full KPMG tax flash here.

 

VAT Public Clarification VATP020 “VAT-free special offers”

The Federal Tax Authority (FTA) has released Public Clarification VATP020 “VAT-free special offers” to remind taxpayers of their obligations under the UAE VAT legislation where goods or services are sold under certain promotional schemes.

Retailers may often advertise promotions where the price for goods or services is discounted by the equivalent of the amount of VAT that would ordinarily be charged as offers that are “VAT free” or “the VAT is on us”.

UAE VAT-registered retailers are reminded that all supplies of goods and services are subject to the standard rate of VAT at 5% unless they qualify for the zero rate or exemption from VAT. VAT should be accounted for on payments received from customers for promotional goods and services and on tax invoices issued for these sales.

Retailers are advised to review their promotional materials to ensure that they do not use misleading language that appears to contravene UAE VAT legislation.

For more details, see the full KPMG tax flash here.

 

VAT Public Clarification VATP021 “VAT registration of sole establishments”

Public Clarification VATP021 “VAT registration of sole establishments” provides clarity on the VAT registration obligations of natural persons operating a number of sole establishments.

Sole establishments are businesses owned and operated by natural persons and are not legally distinct from their owners. Where a natural person owns a number of sole establishments, the sole establishments are not required to be registered separately for VAT. The Federal Tax Authority has clarified that a single VAT registration in the name of the owner should be obtained.

For more details, see the full KPMG tax flash here.

 

Increased transparency rules of ownership for UAE entities

On 28 August 2020, the UAE Ministry of Economy published Cabinet Resolution No. 58 of 2020 (the Decision) on the “Regulation of Procedures Related to Real Beneficiaries”. The Decision requires companies based in the UAE mainland and commercial free zones to maintain registers of their beneficial owners and shareholders. The Decision requires that the companies file their registers with the relevant registrar and licensing authorities.

One of the main drivers for the introduction of these rules is Federal Decree Law No. 20 of 2018 and its implementing regulation, Cabinet Decision No. 10 of 2019, which deals with countering money laundering crimes, the financing of terrorism, and the financing of unlawful organizations. The information maintained in the register could be shared by the Ministry of Economy with foreign governments at their request, as per international cooperation measures.

For more details, see the full KPMG tax flash here

The Kingdom of Saudi Arabia (KSA)

Extension of amnesty for tax filing and payment for three months

The Minister of Finance announced, through a Ministerial Decision, that the amnesty for tax filing and payment will be extended until 31 December 2020. This is an extension of the waiver of penalties for Zakat, income tax, withholding tax, VAT, and excise tax, which ran from 18 March 2020 until 30 June 2020, and which had been previously extended until 30 September 2020.

The Ministerial decision clarified that the General Authority of Zakat and Tax (GAZT) will waive penalties for taxpayers who raised objections against GAZT’s assessments, on the condition that no final decision had been made by the relevant authority, which is the General Secretariat of Tax Committees (GSTC) or the Board of Grievances, as we assume. Penalties will be waived for the objecting taxpayers if they commit to paying the due tax amount or if they request an installment plan within the new deadline which ends on 31 December 2020. The decision made clear that the amnesty does not include a waiver of penalties incurred due to tax evasion.

For the full alert, see the website here.

 

Real Estate Transaction Tax

On 1 October 2020, Royal Decree A84 was issued announcing the creation of a new Real Estate Transaction Tax (RETT) with a rate of 5% calculated on the value of the real estate transaction. All real estate transactions that take place after 4 October 2020 will be exempted from value added tax (VAT) and subject to the new RETT. This decision marks an effort to boost the real estate sector, which forms an integral part of the Kingdom’s Vision 2030.

The General Authority for Zakat and Tax (GAZT) will be responsible for managing and collecting the new tax and the Minister of Finance will decide which VAT regulations will apply to the new tax until new policies and regulations are drafted.

The transactions subject to this new tax include transfer of ownership; the sale of commercial, residential, or agricultural real estate; and the sale of developed and undeveloped land. RETT is levied on all individuals and organizations involved in real estate disposals including natural and legal persons, corporations, companies and government agencies. There is no registration threshold for RETT, where all transactions are taxable except those exempted.

The legal transactions subject to this tax include transfer of ownership, gifting, sale, inheritance, financial leasing, long-term usufruct contracts exceeding 50 years, lease to own, and Islamic Murabahah.

For a more detailed understanding of RETT, see the tax update here

Oman

Oman to implement VAT from April 2021

On 12 October 2020, the Sultan of Oman, Haitham bin Tariq bin Taimur, issued Royal Decree 121/2020 (Oman VAT Law) for the implementation of VAT in Oman. The Oman VAT Law was published in the Official Gazette on 18 October 2020 and will come into effect on 16 April 2021, 180 days after publication.

The other GCC member States that have introduced VAT so far have published the Executive Regulations before VAT was implemented. However, the Oman VAT Law allows the Tax Authority (TA) up to six months after the effective date to issue the Executive Regulations, which gives the TA until October 2021 to issue them.

For more details, see the full KPMG tax flash here.

 

Introduction of excise tax on sweetened beverages

Oman has implemented excise tax at the rate of 50 percent on sweetened beverages with effect from 1 October 2020.

For more details, see the full KPMG tax update here.

 

Oman income tax law amended to incorporate provision related to Automatic Exchange of Information (AEOI) and other key amendments

Royal Decree No. 118/2020 published in the Official Gazette on 20 September 2020 has amended the Oman Income Tax Law. Major amendments include enabling provisions to facilitate AEOI between tax jurisdictions, the introduction of tax residency provisions, and the requirement to file only one tax return within four months from the end of the relevant tax year or accounting period.

For more details, see the full KPMG tax flash here.

 

Oman introduces Country-by-Country Reporting (CbCR) for tax resident entities

As part of Oman’s commitment to implement the four minimum standards under the Base Erosion and Profit Shifting (BEPS) Inclusive Framework, it has now introduced rules for CbC Reporting through the Tax Authority’s Decision No. 79 /2020, published in the Official Gazette today on 27 September 2020.

These provisions will come into effect for reporting fiscal years starting on or after 1 January 2020, based on the accounting period followed by the ultimate parent entity of multinational enterprises group.

Oman is the fourth GCC country, after the Kingdom of Saudi Arabia, Qatar, and the United Arab Emirates, to introduce CbCR rules.

For more details, see the full KPMG tax flash here.

 

Oman no longer on the EU Blacklist

Oman has been removed from the EU blacklist, as per the 6 October 2020 EU Council press release, and is no longer regarded as a non-cooperative tax jurisdiction. This is the result of Oman’s series of reforms to improve its tax policy framework and of taking necessary steps to activate its exchange of information relationship with all EU member states.

Removal from the EU blacklist is a positive development and may boost inbound investment from European countries, which will be essential to uplift the economy in these unprecedented times.

For more details, see the full KPMG tax flash here.

 

Certain tax relief measures extended by Oman

On 8 July 2020, the Tax Authority announced tax relief measures for taxpayers adversely impacted by the Covid-19 pandemic.

The timelines for some of these measures have been extended from the previous deadline. Some of the relief measures include the suspension, until 31 December 2020, of additional tax (at 1% per month) due to a delay in payment of taxes, and the suspension of fines due to a delay in filing the provisional and/or final return of income for the tax year that ended on 31 December 2019.

For more details, see the full KPMG tax flash here

Qatar

Update on the process of filing and paying withholding tax through the new Dhareeba portal

The General Tax Authority (GTA) launched the new tax administration system “Dhareeba” on 1 October 2020. As of the launch, submissions on the old Tax Administration System (TAS) were ceased. With the new system, the GTA’s banking details have changed and the old bank details are no longer to be used for withholding tax payments.

For more details, see the full KPMG tax update here (PDF 108KB)

 

Extended Dhareeba registration deadline – 31 December 2020

As per Circular No. 4, issued by the General Tax Authority (GTA) on 14 October 2020, the ninety-days period initially granted to taxpayers to register on the new tax system “Dhareeba” has been extended for another ninety days. Therefore, the new deadline set to complete the registration is on or before 31 December 2020.

For more details, see the full KPMG tax update here. (PDF 108KB)

Bahrain

Economic substance rules: A year later

The Ministry of Industry, Commerce and Tourism (MoICT) and the Central Bank of Bahrain (CBB) issued a Directive OG/499/2018 (CBB Directive) on 22 November 2018 and a Ministerial Decision No. 106 (MO 106) on 27 December 2018 (collectively ‘Economic Substance Rules’ or ‘ESR’) imposing substance requirements for Bahraini entities undertaking geographically mobile activities in, from, or through Bahrain.

For more details, see the full KPMG tax update here (PDF 433 KB)

 

Commercial Companies Law: Amendments announced

His Majesty King Hamad issued decree No. 28 on 28 September 2020 amending certain provisions of the Bahrain Commercial Companies Law (BCCL) (law No. 21/2001). The amendments are aimed at bringing the BCCL in line with international best practices. Some of the amendments may require companies in Bahrain to make changes to their current structure.

For more details, see the full KPMG tax update here (PDF 361 KB)

Contacts