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.
Abu Dhabi’s Environment Agency together with Abu Dhabi’s Centre of Waste Management has published a Sustainable Construction and Demolition Waste Management in Abu Dhabi Guide. It provides guidance on steps to be taken by companies in the construction sector to reduce the amount of waste they produce on site. It also addresses how they can take responsibility for the collection, segregation, transfer and disposal of their waste. According to Statistics Centre Abu Dhabi, the total amount of waste generated in Abu Dhabi has been growing rapidly in recent years. The official figure for 2016 was about 9.69 million tonnes of solid waste produced or more than 26,000/day.
This week the spotlight is on tax developments in the UAE, where the Implementing Regulations to the Excise Tax Law have been approved. The UAE’s Finance Ministry has published the Implementing Regulations to the Excise Tax Law.
Cabinet Decision No. 37/2017 identifies who is liable to pay tax as someone who conducted the activity (importing, producing or stockpiling excise goods) has not settled the tax, someone in the supply chain, an investor with a financial interest in the supply chain, or the owner of the excise goods. In certain cases, the onus may be on a warehouse keeper to pay the tax, where excise goods have been released from a designated zone and the person responsible for the tax has failed to account for it to the Federal Tax Authority. A stockpiler will not be liable for the tax where they obtain excise goods before the date the Law comes into force if they are ready for release for consumption in the State where the tax has not been paid and not waived or deferred so long as the excise goods are not excess excise goods.
It goes onto clarify the controls and conditions required for applying for tax registration, like the Authority’s right to impose a financial guarantee on someone for tax registration purposes. If a taxable person fails to notify the Authority of their obligation to register for tax, the law allows the Authority to register them with effect from the date the Decree-Law came into force (1 October 2017). A tax period for excise tax will be the calendar month, where the taxable person is expected to submit their tax return no later than the 15th day of the month following the tax period. The Decree-Law says declarations must be filed regularly and tax records be kept in line with a set of requirements, like retaining price lists of excise goods produced, imported or sold and abiding by specific timeframes, limitations and conditions.
They have also issued a Cabinet Decision on excise goods, excise tax rates and how to calculate the excise price. Cabinet Decision No. 38/2017 goes into the specifics of the tax system. It says the agreed rates are 50% for carbonated drinks and 100% for tobacco products and energy drinks. It defines excise price as the higher of the price published by the Authority for the excise good in a standard price list and the designated retail sales price for the excise good, minus the tax included. It goes onto identify the designated retail sales price as the higher of the recommended selling price of the excise good identified, declared and affixed by the importer or producer and the average retail selling price.
According to local newspaper reports, Oman’s Shoura Council has issued a Decision halving the minimum wage requirement for expatriate workers who are looking to bring their family to the Sultanate with them. The wage requirement has been cut from 600 to 300 Rials. The change comes as the country looks to diversify its economy through its Tanfeedh programme.
Qatar’s Civil Aviation Authority (QCAA) and the European Aviation Safety Agency (EASA) have signed an agreement to cooperate on regulatory and aviation safety issues. The agreement aims to enhance collaboration to improve safety and harmonise global aviation including information, knowledge and expertise sharing and regulatory cooperation. It was signed for the EASA by its Executive Director, Patrick Ky and for the QCAA by its Chairman, HE Abdulla Nasser Turki Al Subaey.
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Written Dr Marjan Atashi Golestan is a Visiting Professor of Law at University of Allameh Tabatabaei and Industrial Management Institute of Iran (IMI) who has carried out a specific and detailed study of the law impacting overseas companies and investors who wish to set up and operate in Iran.
The legislative position in Iran in this area is not always clear and some of the legislation can be confusing when looked at in isolation. As a result Dr Golestan has carried out extensive research including reviews of associated parliamentary debates and provides information on the practice on the ground to clarify the position.
A key point for those investing in Iran is whether they want protection from potential nationalization and expropriation, so the benefits and requirements for registration under this regime is discussed extensively, along with differences between onshore and freezone operations, intellectual property concerns, visa requirements for expatriate staff and business owners, taxation and dispute resolution options.