Welcome to the September edition of our tax newsletter, bringing you news on global and regional tax developments.
The United Arab Emirates (UAE)
The UAE Supreme Court has issued a ruling in its first tax evasion criminal case
All taxpayers should take note of the UAE Federal Supreme Court’s first ruling on tax evasion in a criminal case.
Tax evasion, under the Tax Procedures Law is defined as “The use of illegal means resulting in the reduction of the amount of the Due Tax, non-payment thereof, or a refund of a tax that a person does not have the right to have refunded under any Tax Law.”
The criminal penalties which apply for committing tax evasion are significantly more severe than the administrative penalties that may otherwise apply where an entity makes a voluntary disclosure (VD) within the appropriate time limits. Depending on the circumstances, a prison sentence or monetary penalty not exceeding five times the amount of evaded tax or both may be imposed on the taxpayer in circumstances of tax evasion.
The potential implications of this ruling, coupled with the recent reduction in administrative penalties where a taxpayer submits a VD to the FTA, will encourage taxpayers to review their tax affairs and submit VDs where appropriate or seek further clarification from their adviser or the FTA. In general, taxpayers are required to submit a VD correcting an earlier error within 20 working days of becoming aware of that error. While submitting a VD within the permitted timeframe can significantly reduce administrative penalties, failure to submit a VD within this timeframe will result in additional penalties.
See our Tax Flash here
The Oman Tax Authority (OTA) has recently issued a ‘taxpayer specific’ notification emphasizing not to have any dealings with any Establishments (including permanent establishment of a foreign company) and Companies in Oman which are not holding a valid tax card in Oman.
Such Establishments and Companies as per the notification would be considered in violation of the applicable Laws and By-Laws in the Sultanate of Oman. This notification (uploaded on the respective taxpayer’s portal) is effective from its issuance date. The OTA shall carry out cross examination to ensure its implementation by the taxpayers in Oman.
Parliament’s Financial and Economic Affairs Committee discussing introduction of corporate income tax
Local news of Bahrain has reported that the Parliament’s Financial and Economic Affairs Committee (PFEAC) is studying to impose a law for corporate income tax on commercial establishments and companies in Bahrain.
Once approved by the PFEAC, this proposal will be put up for vote in the Parliament’s next session.
Jordan issues Transfer Pricing Implementation Instructions
On 7 June 2021 the Jordan Ministry of Finance published the Transfer Pricing regulations (“TP Regulations”). The TP Regulations described in general terms the Transfer Pricing obligations for companies operating in Jordan. Last week, the more detailed Implementation Instruction were published.
The Implementation Instruction specify that the TP Regulations apply to any taxpayer in Jordan with related party transactions exceeding JOD500k (eq. USD705k) in a 12-month period.
Read the full alert here