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

The KPMG member firm in the Netherlands has updated a report providing an overview of the CbC reporting notification requirements for all countries that have (currently) implemented final CbC reporting legislation from 2016 through 2021 and thus far in 2022.

Read the KPMG Report here

The UK government today announced that the effective date of Pillar Two legislation in the UK will be delayed and will now first apply to accounting periods beginning on or after 31 December 2023.

The delay is in response to feedback received during the UK’s recent public consultation on the implementation of Pillar Two.  A common concern was the need for a sufficient lead-in time due to the complexity of the rules; the fact that there remain important policy and administrative issues to be discussed within the OECD Implementation Framework; and the need for businesses to take steps and build systems to be able to determine rule compliance.  In addition, there was concern that an early implementation by the UK ahead of other countries could put the UK at a competitive disadvantage. 

Read the full tax flash here

The final scheduled meeting of the Economic and Financial Affairs Council of the EU (ECOFIN Council) under the French Presidency of the ECOFIN Council took place today.

Despite Poland lifting previous reservations, the EU Member States were unable to reach political agreement on the minimum tax directive proposal due to a change in position by Hungary, which decided to veto the proposal despite having agreed to support the initiative at previous ECOFIN Council meetings.

Concerns previously raised by Poland on treating the two-pillar solution as a package were addressed in documents that had not been made public at the time of the release of this report. 

Read the full tax flash here

VAT Public Clarification VATP029 on Gold – Making Charge

The newly published VAT Public Clarification VATP029 specifies that the suppliers of gold items are required to impose VAT on the service of making a jewelry item if a separate fee for such service is identified and charged by the jeweler.

VAT Public Clarification VATP029 applies only to gold and products consisting mostly of gold, referred to as “gold items”, that are subject to VAT under a special reverse charge mechanism (RCM) stipulated in the Cabinet Decision No. 25 of 2018 on the Mechanism of Applying Value Added Tax on Gold and Diamonds between Registrants in the State (“Cabinet Decision No. 25”), which requires the registered recipient to account for VAT on the supply instead of the supplier.

The Public Clarification confirms that, where the supplier charges a single price for the gold item and the making charge, the supply can be construed as a single composite supply of a gold item subject to VAT under RCM. However, where the charge for the crafting service is reflected separately, the supplier will be regarded as making multiple supplies and would be required to apply the correct tax treatment to each separate component.

Read the full Tax Flash here

ZATCA Penalty Exemption Initiative

As per Ministerial Resolution (MR) No 1737, Zakat, Tax and Customs Authority (ZATCA), as part of its efforts to mitigate the impact of the COVID-19 pandemic on the economic activities in the Kingdom, has announced the re-launch of the amnesty initiative that waives off the penalties on all taxes for the taxpayers for six months starting from 1 June 2022 till 30 November 2022.

ZATCA has announced, through a notification on its website, that the initiative for the waiver of penalties for Income Tax, Withholding Tax, VAT, Excise Tax and Real Estate Transaction Tax (RETT), runs from 1 June 2022 until 30 November 2022

Read the full alert on our website

Social insurance and unemployment contribution rates revised

The Social Insurance Organisation (SIO) has recently announced the revised social insurance and unemployment insurance contribution rates. The update rates below (with maximum monthly income subject to the contribution capped at BHD 4,000/-)

*unemployment insurance contribution

**employers contribution for Bahraini nationals will increase annually by 1% until it reaches 20% in January 2028.

Read the tax newsletter prepared by the KPMG member firm in Bahrain

Oman Tax Authority (“OTA”) publishes the Import and Export Value Added Tax (VAT) Guide

The OTA has issued the VAT Guide on Import and Export in Arabic which provides guidelines on the following:

• VAT treatment on import of goods in Oman
• VAT treatment on import of services in Oman
• Input credit claim of VAT paid on import of goods and services
• VAT treatment on export of goods from Oman  
• VAT treatment on supply of goods in the departure areas of airports and ports
• VAT treatment on export of services from Oman

Oman Tax Authority (OTA) publishes guidelines on Mutual Agreement Procedure (“MAP”)

OTA has lately published guidance on seeking assistance under MAP. MAP is an alternate tax dispute resolution mechanism available to taxpayers under the tax treaties for resolving disputes giving rise to double taxation or taxation not in accordance with tax treaties. Enhancing dispute resolution through MAP (Action 14) is one of the four minimum standards that Oman has agreed to as part of OECD BEPS Inclusive Framework.

MAP process involves competent authorities of the respective contracting states resolving disputes arising from taxation. In case of Oman, the competent authority is OTA. The guidelines issued inter-alia provides for legal basis for a MAP request, timelines, procedures, factors for accepting a MAP request, stages of MAP process, its interaction with domestic remedies etc.

Click here to access the document