prpri VAT in UAE & KSA – Transactions between KSA & UAE: UPDATE VAT in UAE & KSA – Transactions between KSA & UAE: UPDATE

In my previous post basis the analysis of relevant articles of both (KSA & UAE) Executive Regulations, I tried to explain that transactions between KSA & UAE to be treated as Export/ Import as done with outside GCC countries.

As most of us are looking for a formal confirmation on the same and now GAZT has confirmed that “as a temporary measure, imported goods from GCC countries will be included in the VAT until the activation of Electronic Tax Service Systems between GCC countries”.

This resulting that rules under Article 70(15) of the UAE ER will prevail which states that “a GCC country to be treated as implementing state only under the reciprocal arrangement” and post confirmation from GAZT, since KSA is not treating UAE as implementing state, trade between UAE/ KSA will flow as normal Export/Import without any specific privilege of implementing states.

Abstract of the Articles:

Article 71 of the GCC VAT Agreement: Each Member State shall create an electronic Services system for the purposes of complying with requirements related to Tax. The GCC Secretariat General shall take the necessary measures to establish a tax information center, and to operate a central website or electronic system to follow up the information related to Internal Supplies and the exchange of this information between the concerned Tax authorities in the Member States; provided that the website or electronic system of the tax information center must include at least the required information.

Article 79 (7) of IR of KSA VAT Law: Prior to the introduction of of the Electronic Services System in all Member States (a) a Taxable Person who receives Goods into the Kingdom from another Member State shall be deemed to have imported the Goods into the Kingdom, and Tax will be collected in accordance with the provisions for other imports, (b) Supplies of Goods involving transport of the Goods from the Kingdom to another Member State shall be treated as an Export of the Goods for VAT purposes.

Article 70(15) of ER of UAE VAT Law: A GCC State shall be treated as an Implementing State according to the provisions of the Decree-Law and this Decision if the following conditions are met: a. Where the GCC State treats the State similarly as an Implementing State in its published legislation. b. Full compliance with the provisions of the Common VAT Agreement of the States of the Gulf Cooperation Council (GCC).

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Tax & Commercial Professional with 15 years of experience in Direct & Indirect Taxation, VAT, formulating Tax Planning Strategies, maximizing Tax Savings opportunities, driving Transfer Pricing Compliance, Business Restructuring, Mitigation of PE risk and setting up New Projects. View Full Profile

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July 2021