According to senior International Monetary Fund officials, VAT is likely to be introduced at different times across the GCC region. They had intended to introduce VAT simultaneously in January but so far only Saudi Arabia and the UAE look like they will do so. When it is introduced VAT will be introduced at 5%. It will require significant administrative and technical changes including detailed regulations and making sure all affected companies are registered. However all six GCC states remain committed to introducing it.
LexisNexis, the world-leading global provider of legal information, is pleased to host, its first legal events for the legal communities in Oman and in Kuwait.
Thanks to these conferences, we offer you the opportunity to reunite and talk about the latest legal developments in Business Law. Leading experts in Oman and in Kuwait will be giving you all the update you need to have.
So save the date for:
- Muscat, November 23, 2017 – The Oman Business Law Forum
In partnership with the Omani British Lawyers Association, the Omani Lawyers Association, and the Association of Corporate Counsel of Middle East Info & Registration: https://www.lexis.ae/events/oblf-2017/
- Kuwait City, November 27, 2017 – The Kuwait Business Law Forum
In partnership with the Al Yaqout group and the Association of Corporate Counsel of Middle East Info & Registration: https://www.lexis.ae/events/kblf-2017/
This week the spotlight is on legal and regulatory developments in Qatar, where the country’s Cabinet has approved a draft industrial zones law and referred it to the Advisory Council for further consideration. It defines industrial zones as areas designated for industrial purposes in line with its provisions, including lands, installations and facilities erected on it. Under the law, the establishment of industrial zones will be decided by a Cabinet Decision following a recommendation from the Energy and Industry Minister and the relevant authorities in the country. All natural resources which appear or lie in the industrial zone territory will be State property and tenants will be adequately compensated for the loss of full or partial use of these lands. No industrial establishment will be able to be founded in the industrial zones without authorisation from relevant authorities in the State and after Energy and Industry Ministry approval.
The Cabinet also approved a draft law to protect national products and tackle any practices which may harm them internationally but in line with World Trade Organisation agreements. ‘Harmful practices’ are defined as ‘dumping, dedicated subsidy and increase in imports’. ‘Dumping’ is defined as ‘exporting a product to the country at a price below the normal value of its counterpart in the exporting country’. A committee to enforce the law will be established at the Economy and Commerce Ministry. Its members will have experience in WTO agreements and Ministry representatives and relevant entities. It will have the power to receive reports on violations of the law and review them as well as carry out the necessary investigations. It will also be able to propose appropriate measures and practices to be taken regarding complaints referred to it and submit relevant proposals to the Minister. In addition, they will be able to propose preventive measures to protect national products in line with the law. Based on Committee recommendations the Minister will take appropriate measures to enforce the law.
Weekly Spotlight: Oman has joined the Organisation of Economic Development’s Base Erosion and Profit Shifting framework
This week the spotlight is on tax developments in Oman, where the country has joined the Organisation of Economic Development’s Base Erosion and Profit Shifting framework. It aims to curtail multinational group tax avoidance and improve the resolution of tax disputes between countries. By joining it, Oman has agreed to adopt minimum standards developed in 2015 by the Organisation and G20 nations. The country will now have to adopt provisions to prevent tax treaty ‘shopping’, implement country-by-country reporting on multinationals and exchange country-by-country reports. It will also have to limit the benefits of any intellectual property or other preferential tax regimes established in Oman and will need to fully implement the mutual agreement procedures in its tax treaties with other countries to aid resolution of tax disputes. The Sultanate becomes the 103rd country to join the framework.
Elsewhere, the country’s Health Ministry has announced it is considering introducing a junk food tax following concerns over obesity and other related health issues in the country. It comes as Oman amongst the other GCC countries work towards implementing an excise tax on energy and fizzy drinks as well as tobacco. Ministry officials said the tax could see junk food prices increased from 100 or 200bz to 500bz.
Saudi Arabia’s Justice Minister, Walid Al-Samaani has announced the Kingdom’s commercial courts have officially launched. There are three commercial courts in the Kingdom and they are in Riyadh, Jeddah and Dammam. It is hoped they will encourage investment in the country in line with the Saudi Vision 2030. Specialist commercial chambers have also opened in the public courts in several Saudi cities.
The UAE’s Finance Ministry has announced it is developing the Implementing Regulations to the Federal VAT Decree-Law. The VAT rate on all taxable and exempt goods, exports and services is yet to be announced. The relevant Regulations will be published in the Official Gazette.
Bahrain’s Central Bank has announced it is going to establish a dedicated Fintech Unit to ensure the best services are provided to individual and corporate customers in the financial sector. The announcement was made following the Bank’s latest Board meeting. The proposed Unit will be responsible for approving companies’ participation in the Regulatory Sandbox. It will also supervise licensed companies’ activities and operations, including cloud computing, payment and settlement systems, and monitoring technical and regulatory developments in the fintech field.
This week the spotlight is on legal and regulatory developments in the DIFC, where the Dubai International Financial Centre Authority has launched a consultation on a proposed Common Reporting Standard Law (DIFC Law No. 7/2017) and Common Reporting Standard Regulations. The Consultation ends on 8 November 2017. The proposal follows UAE Federal Cabinet Decision No. 9/2016 where the UAE Federal Government committed to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority on Automatic Exchange of Financial Account Information. Article 5 of Federal Law No. 8/2004 (the Financial Free Zone Law) states ‘Financial Free Zones shall not do anything which may lead to a contravention of any international agreements to which the [UAE] is or shall be a party’. The DIFC therefore has to introduce the relevant regulatory regime.
Elsewhere, the Authority has launched a consultation on proposed new Trust and Foundation Laws. The consultation ends on 8 November 2017. The Authority is also proposing to establish a Family Business Centre. The Centre would support regional and international family offices who are looking to relocate private wealth and succession planning structures. The laws are aimed at boosting the conventional and Islamic wealth management sector.
Saudi Arabia’s Crown Prince and Deputy Prime Minister has announced the Kingdom is going to establish the world’s first independent economic zone. The Neom zone will extend across Egypt, Jordan and Saudi Arabia, will cost $500 billion and cover 26,500 square kilometres. It will focus on energy and water, mobility, biotech, food, technological and digital sciences, advanced manufacturing, media and entertainment. It will be open to private and public investors as well as partnerships and will be powered by renewable energy.
KSA: Confirmation that all companies will be subject to VAT if their annual revenue is at least 375,000 SAR
Saudi Arabia’s General Authority for Zakat and Tax has confirmed all companies operating an economic activity will be subject to VAT if their annual revenue is at least 375,000 Riyals. The Authority added all companies whose annual revenue exceeds a million Riyals should register before 20 December 2017. However, companies with annual revenue between 375,000 and a million Riyals can register by 20 December 2018.