Welcome to November edition of our tax newsletter, bringing you news on global and regional tax developments.

International updates

KPMG report: The impact of BEPS on tax incentives in Asia Pacific

Governments in jurisdictions globally are moving quickly to determine their policy responses to the measures set out by the OECD Inclusive Framework (IF) on 1 July 2021, when 133 out of 139 IF members reached a majority agreement on the building blocks for a new global tax framework – the BEPS 2.0 Pillar One and Pillar Two reforms.

Jurisdictions in the Asia Pacific region are no exception. Many are currently offering a range of tax incentives, several of which are below the global minimum tax rate, to attract foreign investment and drive the development of local infrastructure.

Please find KPMG’s report on the impact of BEPS on tax incentives in Asia Pacific here

EU: “Public” country-by-country reporting formally adopted by the European Parliament

The European Parliament on 11 November 2021, formally adopted a directive for “public” country-by-country (CbC) reporting.

The public CbC reporting applies with regard to multinational groups operating in the EU with a total consolidated group revenue of at least €750 million.

This action by the European Parliament is the last step in the directive’s adoption process. Once the directive is published in the Official Journal of the European Union (expected shortly), it will enter into force 20 days after publication. It is expected the directive could be published in December 2021.

Please read detailed tax flash

OECD: Peer review of automatic exchange of information (AEOI)

The Organisation for Economic Cooperation and Development (OECD) published a report “Peer Review of the Automatic Exchange of Financial Account Information 2021.”

The November 2021 report includes:

Updated information on peer reviews of the legal frameworks in place for the implementation of the standard for automatic exchange of financial account information in tax matters (AEOI Standard) that were first published in 2020

A summary of the Global Forum's evaluation on the effectiveness of the AEOI standard in practice.

A review of the legal frameworks for the two jurisdictions (Ghana and Kuwait) which agreed to start exchanging information from 2019

Results are expected to be published in 2022.

Please read a detailed review prepared by KPMG LLP

GCC updates

United Arab Emirates (UAE)

Amendments to the Federal Decree-Law on Tax Procedures No. 7

The UAE Cabinet has issued Federal Decree-Law No. 28 of 2021 (16 September 2021), amending Federal Decree-Law on Tax Procedures No. 7 of 2017 (11 June 2017) (The Federal Decree-Law on Tax Procedures).

All taxpayers should take note of the amendment of The Federal Decree-Law on Tax Procedures with effect from 1 November 2021 with below notable changes:

  1. The time limits for filing reconsideration applications, objections before the Federal Tax Authorities (FTA), Tax Dispute Resolution Committee (TDRC), and appeals before Competent Courts have been increased from 20 to 40 business days.
  2. The FTA should review the reconsideration request and issue its decision within 40 (previously 20) business days from the date of receiving the applications and should inform the applicant of its decision within five business days from the date of issuance of the decision. In its decision, the FTA will have to explicitly state reasons for making such a decision.
  3. Objection before TDRC is not admissible if it is not filed within 40 business days from the date of being notified of a reconsideration decision by the FTA.
  4. When filing an objection before TDRC, only the tax amount (as against tax and penalties previously) should be deposited for admissibility of the case.
  5. The TDRC’s final decisions regarding disputes exceeding AED 100,000 should be deemed as executory instruments if they were not appealed before the Competent Courts within 40 (previously 20) business days from the date of notification of the outcome of the objection.
  6. An alternate mechanism for filing objections and appeals to be prescribed for federal and local government entities in tax disputes for which the Cabinet shall – according to a suggestion by the Minister – issue a respective decision.
  7. As a pre-condition for filing an appeal before the Competent Courts, a minimum of 50% of penalties (or as may be decided by the Competent Courts), to be paid either by way of cash transfer or bank guarantee (as opposed to full amount).
  8. Cases for waiver, refund and payment in installments of administrative penalties to be reviewed and approved by a special committee (previously by the FTA). The separate decision by the Chairman of the Board of the FTA shall set out the formation of the committee, its bylaws, and the manner of holding meetings for such cases.
  9. The Cabinet decision is now expected for more details on controls and procedures to be used during committee meetings, regarding approving the payment by installments of the penalty amount or totally or partially waiving or refunding it. The controls specified in the Executive Regulation of the Federal Decree-Law on Tax Procedures are not anymore referenced as a result of the amendments.

Read our tax flash for detailed review

Public Clarification on Amendment of the Tax Procedures Law

The Federal Tax Authority (FTA) has issued Tax Procedures Public Clarification (TAXP003) on Amendment of the Tax Procedures Law.

The Public Clarification highlights two major changes concerning the procedures for objection and appeal, namely:

  • Extension of the timelines within which a person may object or appeal against an FTA decision;
  • Easement of requirements to pay penalties, by removing the requirement to pay such penalties before accessing TDRC and by requiring only a partial payment of penalties before accessing the Courts.

The prompt issuance of the public clarification by the FTA is welcome guidance, aimed at increasing awareness amongst taxpayers.

Read our tax flash here

Penalty Reconsideration Submission Procedure

The reconsideration request service is now available through the e-services portal instead of the FTA’s main website.

Taxpayers shall now submit penalty reconsideration requests, if needed, through the e-services portal, instead of the official FTA website. Taxpayers shall follow the below steps to submit penalty reconsideration requests:

 

For users registered for VAT purposes:

  • Login to the e-services portal
  • Click on “Reconsideration” to access the reconsiderations dashboard
  • Click on the “Registered Reconsideration” tab
  • Click on “New Reconsideration Request”
  • Fill in the form, attach the required documents, and submit the form

For users not registered for VAT purposes:

  • Create an e-services account with the FTA
  • Verify your e-services account
  • Login to your e-services account
  • Create a new taxable person account by clicking on “Add New Taxable Person”
  • Click on “Reconsideration” to access the reconsiderations dashboard
  • Click on the “Non-Registered Reconsideration” tab
  • Click on “New Reconsideration Request”
  • Fill in the form, attach the required documents and submit the form

Read our tax flash here

Bahrain

Bahrain VAT rate increase

The National Bureau for Revenue (NBR) is yet to issue transitional rules for the VAT rate increase. However, with less than 30 working days to the proposed increase of the VAT rate to 10% effective 1 January 2022, business can already take steps to ensure they are prepared well before the effective date. KPMG Bahrain conducted a webinar in October on what businesses should be doing - click here to access the recording of the webinar as well as the presentation.

Businesses may have taken VAT costs less seriously as errors at 5% or the inability to claim input VAT may have not had a material impact on their finances. However, with the rate set to double, VAT should become a material consideration for most businesses because errors and the inability to claim input VAT is likely to have a significant impact. Whilst we await the transitional rules from the NBR, the KPMG Bahrain tax team have prepared a number of Tax Insights to assist Bahrain businesses as they prepare for the VAT rate increase:

Qatar

Qatari VAT law under legislation

In a statement from the President of the General Tax Authority (GTA), it has been reaffirmed that the introduction of VAT in Qatar is currently under legislation.

Oman

Oman and Qatar sign Double Tax Avoidance Agreement (DTAA) and Investment Protection Agreement (IPA)

On 22 November 2021, Oman and Qatar signed the DTAA and IPA. These agreements were signed during a two-day state visit by Oman’s Sultan to Qatar. Text of the DTAA and IPA is yet to be published.

Executive Regulations (ERs) to Oman Commercial Companies Law issued

A new Commercial Companies Law (CCL) was pronounced in Oman on 13 February 2019 and made effective from April 2019. The CCL was to be supplemented with issuance of the ERs setting out the controls, rules, and procedures for establishing and regulating the companies. Oman has issued these ERs on 14 October 2021. The same were published in the Official Gazette on 24 October 2021 and have been made effective from 25 October 2021.