Welcome to the December edition of our tax newsletter, bringing you news on 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.

KPMG Events

Tax Webinar: What to watch out for: Developments and adjustments – Year-end closure

This webinar was held on 16 December 2020 by KPMG Saudi Arabia, in English and in Arabic, to discuss year-end closure and the closing of accounts. Our tax experts covered issues related to indirect tax, domestic tax, and transfer pricing.

To watch the playback in English or in Arabic, click here

International updates

OECD: Compendium of comments on “Blueprints” concerning tax challenges from digitalisation of the economy

The Organisation for Economic Cooperation and Development (OECD) released comments received on reports described as “Blueprints” concerning solutions to the tax challenges arising from digitalisation of the economy.

On 14 December 2020, KPMG tax professionals submitted comments (PDF 247 KB) with respect to the OECD’s request.

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

GCC Updates

The United Arab Emirates (UAE)

Dubai Customs fine reduction initiative

The Dubai Customs Authority announced, through a press release, that an 80% discount is granted on fines applicable to customs cases and violations detected or committed before 31 March 2020. This announcement is based on Customs Notice No. 07/2020.

To benefit from the fine reductions, businesses and individuals must settle their customs cases and pay any charges due, including customs duties, before 31 December 2021.

For more details, see the full KPMG tax flash here

The Kingdom of Saudi Arabia (KSA)

Electronic invoicing regulations

Following the release of the electronic invoicing (e-invoicing) draft regulations in September 2020, the General Authority of Zakat and Tax (GAZT) issued the final regulations on its website on 4 December 2020, after the approval of its board of directors. The regulations entered into force on the date of publication and must be applied within the next 12 months, i.e. by 4 December 2021.

E-invoicing regulations are integral and complementary to the Value Added Tax (VAT) Implementing Regulations and apply to all taxpayers who are subject to VAT. The new regulations define the terms, requirements, and conditions related to electronic invoices. For example, confirming the definition of an electronic invoice to be a tax invoice issued electronically through electronic means, which excludes scans or copies of invoices.

For more details, see the full KPMG tax flash here

RETT rules and conditions for real estate developers

The General Authority of Tax and Zakat (GAZT) released the rules and conditions for real estate developers to be considered eligible for the recovery of input tax related to exempt real estate supplies. The announcement was made through Ministerial Decision No. 1754, dated 30 November 2020, and comes into effect on the date of publication. 

For more details, see the full KPMG tax flash here

Bahrain

Bahrain VAT - Recoverability of input tax on capital assets

VAT is usually charged on purchase of capital assets. However, the recoverability of such VAT is not as straightforward. There are many issues for registered businesses to consider when recovering input VAT incurred on capital assets.

In accordance with Article 60 paragraph C of the Bahrain VAT Executive Regulations, background VAT is usually charged on purchase of capital assets. However, the recoverability of such VAT is not as straightforward. There are a number of issues for registered businesses to consider when recovering input VAT incurred on capital assets. A taxable person shall deduct the input tax in the first tax year during which the capital assets are used for the first time.

For more details, see the full KPMG tax flash here (PDF 223 KB)

Bahrain VAT - Construction and real estate

Under the Bahrain VAT Law, specific relief has been granted to the construction and real estate sector. While supplies related to construction of new buildings have been zero-rated, supply of bare land and buildings (whether by way of outright sale, rental or lease) has been made exempt. However, there are many exceptions as well as conditions associated with the beneficial VAT treatment. Therefore, contractors, sub-contractors, developers and property owners should consider the rules carefully to ensure they are fully compliant.         

For more details, see the full KPMG tax flash here (PDF 250 KB)