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Middle East VAT news: 5 crucial updates for the new year

The Middle East continues to be home to some of the world’s most complex and stringent VAT laws, making compliance a must for all businesses.

We’ve rounded up five of the top talking points from the first few days of 2021:

1) Saudi Arabia’s new e-invoicing regulations

A new regulation in Saudi Arabia requires all taxable persons resident in the country for VAT purposes or those who act on their behalf to issue an e-invoice for all taxable supplies.

GAZT has published the new rule and granted a 12-month grace period from 4th December 2020 for business owners to implement the mandatory e-invoicing. The e-invoice must be delivered by electronic and digital means; a scanned paper invoice will not be permitted.

By moving to a fully electronic system, invoices and all the data contained within them can be shared directly with GAZT, giving the authority the ability to validate, control, track, audit and report on all transactions taking place within Saudi Arabia.

2) UAE confirms PPE included in 0% VAT drive

The UAE government has confirmed face masks, disposable gloves, chemical disinfectants and antiseptics are all included within its temporary application of VAT at 0% on essential items of PPE.

A Cabinet decision was made in September 2020 to zero-rate items of PPE as the nation deals with the pandemic, but it has only recently announced exactly which types of equipment are covered. The decision is effective for the period between 1st September 2020 and 28th February 2021. Any supplies or imports with a date of supply falling in this period are eligible for 0% VAT.

3) Bahrain amends VAT rule for telecommunication services

A critical regulation relating to VAT liability in the telecommunications industry in Bahrain has been updated. The country’s National Bureau for Revenue has published a clarification relating to the place of supply rule for the sector.

It means the ‘use and enjoyment’ rule now states the place of use will be the place of residence of the customer, regardless of whether the customer is a business or a consumer.

Suppliers will be required to consider various factors – including IP address and country of issue of the SIM card – to determine the correct place of use and determine the relevant VAT liability.

4) Saudi Arabia readying new real estate tax

Authorities in Saudi Arabia are making the final considerations over a proposed new real estate tax. GAZT set a deadline of 25th December 2020 for submissions on the new real estate transfer tax.

5) Oman confirms zero-rated food items

Ahead of the implementation of its VAT system in April, Oman has confirmed more details around the regulations it is set to impose on businesses. These include the publication of a list of zero-rated food items, which contains meat, fish, poultry, dairy products, fresh eggs, vegetables, fruits, coffee, tea, grains, olive oil, sugar, baby food, bread, bottled drinking water and salt.

We may still be in the first week of 2021, but the tax world is moving faster than ever with a raft of new rules, rates and regulations being announced every day. For more information on how our automated tax determination solution can keep your business on the right side of local laws in any country in the world, get in touch today.