We are delighted to bring you our A&M Tax & Customs Newsletter New Year edition. This newsletter is filled with essential insights and analyses of the most significant tax and customs regulatory developments from the past quarter across the Gulf region.
 

Gulf Cooperation Council (GCC) Updates

INDIRECT TAX UPDATES – Value Added Tax (VAT), Customs & Excise Tax 

GCC Adoption of a Unified 12-digit Customs Tariff

From 1 January 2025, GCC countries will apply a new version of the GCC Unified Tariff, update will change the Harmonized System (HS) code structure from 8 to 12 digits for all products. The aim of this is to streamline the reporting and accuracy of statistical data and enable efficiency for both businesses and the customs authorities.

Most tariff codes will be expanded to include additional 4-digit subcodes, allowing for more specific categorisation of products. For example, the current code for laptops (84 71 30 00) will be split into separate subcodes for laptops (84 71 30 00 00 02) and tablets (84 71 30 00 00 03). Further details can be found in the update section for Oman which was one of the first GCC countries to formally publish the tariff.

A copy of the new tariff published can be found here.

GCC Anti-Dumping Duties for Electrical Goods Originating or Exported from the Peoples Republic of China

Following the conclusion of an investigation by the Gulf Cooperation Council Secretariat General (GCC SG), GCC countries are to impose anti-dumping duties of electrical fittings, switches, plugs and sockets for voltages not exceeding 1000 volts which are imported into the GCC.

Dubai Customs have published two notices on this, Notice No. (6/2024) and Notice No. (2/2025) and the Saudi General Authority of Foreign Trade (GAFT) has also published a notice here.

Most importers of these goods will face anti-dumping duties of 12.2%. In recent years, there has been an upsurge in anti-dumping and countervailing measures in the GCC. Confirming your HS codes and non-preferential origin is crucial to determine if your goods are impacted. Importers should keep a close eye on any ongoing investigations and changes to current anti-dumping measures in force.

United Arab Emirates ("UAE")

Direct Tax Updates

Corporate Tax Returns

On 11 November 2024, the Federal Tax Authority (“FTA”) published the Corporate Tax (“CT”) return guide to assist taxpayers in preparing their initial CT returns. While there are certain areas that require further clarification from the FTA, the guide provides details on CT return operations, forms, calculations, schedules, elections, and section interplay. It also covers thresholds with relation to transfer pricing (“TP”) disclosures, reporting payments, asset transfer gains / losses, and adjustments for non-arm’s length transactions.

The guide highlights that up to 20 schedules may need to be completed, depending on each taxpayer’s tax footprint. Many of these schedules require data points not typically captured at the General Ledgers (“GL”) account level. Technology can significantly streamline the maintenance and preparation of these schedules, improving efficiency and accuracy.

For further information on this update, please click here.

For further support, please contact our experts to help you in your CT compliance journey.

Pillar 2 Release

There has been significant activity in the Middle East regarding tax reforms, particularly impacting large multinationals in the Gulf Cooperation Council (“GCC”), as all six countries in the region are Organisation for Economic Co-operation and Development (“OECD”) Inclusive Framework members. The introduction of the 15% Global Minimum Tax (“GMT”) under the Pillar 2 rules is now being implemented.

In the case of the UAE:

• The Ministry of Finance (“MoF”) has confirmed the introduction of a Domestic Minimum Top-up Tax (“DMTT”) of 15% for large groups with revenues over EUR 750m, effective January 1, 2025.
   
• While draft legislation is still pending, the UAE has not yet confirmed whether it will solely introduce the DMTT or also include other Pillar 2 mechanisms, such as the Income Inclusion Rule (which we would expect).
   
• The MoF confirmed that the new legislation will be accompanied by new tax laws on incentives and reliefs to attract inbound investment.

For further information on Pillar 2 in the UAE, please click here.

Other GCC countries, such as Qatar, Kuwait, and Bahrain are also making progress with these reforms. 

INDIRECT TAX UPDATES – Value Added Tax (VAT), Customs & Excise Tax 

VAT Regulations Update

As part of its ongoing efforts to clarify and improve the VAT framework, UAE Cabinet issued Decision No. 100 of 2024 dated 6 September 2024 amending the provisions of UAE VAT Executive Regulations. Key highlights include:

1. Crypto Assets: A broad VAT exemption for crypto assets, including non-fungible tokens (“NFTs”) and cryptocurrencies, with retrospective application from January 1, 2018. Businesses must reassess VAT accounting and input tax recovery for these assets.
    
2. Investment Fund Management: A new VAT exemption for fund management services necessitates operational reviews, as domestic funds and managers may need to de-register.
    
3. Input Tax Recovery: Businesses can now recover VAT on employee medical insurance (within limits) and benefit from simplified partial exemption recovery methods.
    
4. Tax Invoices and Credit Notes: New rules clarify timelines for simplified and summary tax invoices and establish record-keeping requirements for credit notes issued via agents.
    
5. Export Evidence: Revised documentation requirements for zero-rated exports provide greater clarity for compliance.

For further information on this update, please click here.

Amendment of UAE VAT Law

Five articles of the UAE VAT Law have been amended vide Federal Decree Law No. 16 of 2024 to pave the way for the introduction of e-invoicing in the UAE. These changes have been listed below:

• Definitions – one of the most notable changes is the introduction of Electronic Invoice, Electronic Credit Note and Electronic Invoicing System definitions under Article 1.
   
• Input tax recovery conditions – a new paragraph has been inserted to cater for recovery subject to the retention of Electronic Invoices where they are issued / should have been issued in accordance with the Electronic Invoicing System.
   
• Tax invoice and credit note issuance rules – taxpayers that are subject to the Electronic Invoicing System are now obliged to issue Electronic Invoices and Electronic Credit Notes in accordance with that system where applicable.
   
• Administrative penalties updated – the wording around failure to issue tax invoices and tax credit notes has been updated and the following added ‘within the legally prescribed period’.

For further information on this update, please click here.

Federal Tax Authority Decision 8 of 2024 issued regarding voluntary disclosures for VAT

The Federal Tax Authority (‘FTA’) has issued a decision specifying that if a taxpayer becomes aware of an error or omission in the tax return where there is no difference in due tax resulting from any of following reasons mentioned below, they shall correct such error by submitting a Voluntary Disclosure:​​​​​

• Incorrect reporting standard rated Taxable Supplies in relation to an Emirate in the box of another Emirate.
• Incorrect reporting of zero-rated Taxable Supplies, whether by understating or overstating.
• Incorrect reporting of Exempt Supplies, whether by understating or overstating. ​​​​​​

The decision is effective from 1 January 2025.

Cabinet Decision 127 of 2024 expanded the scope of reverse charge mechanism to precious metals and precious stone

• Cabinet Decision No. (25) of 2018 concerning the application of the reverse charge mechanism on gold and diamonds among registrants in the state has been repealed and replaced by a new Cabinet Decision (127) of 2024.
   
• The new cabinet decision states that VAT would apply under reverse charge for precious metals, precious stones, or jewelry made of any precious metals or stones (provided that their value constitutes the main value of the item, and not as part of other composite materials) when supplied to a VAT-registered recipient in the UAE, where the recipient's intention is to resell, use it for further production, or reuse the goods etc.
  • Precious Metals stated in the decision are - Gold and silver, whether raw or processed.
  • Precious Stones stated in the decision are - Natural and artificial diamonds, pearls, sapphires, emeralds, and rubies.​​​​​​​​​​​​

Transfer Pricing Updates

Related Parties and Connected Persons in the UAE

Federal Decree-Law No. 47 of 2022 established the CT and TP regimes. Subsequently, the TP guide, released on 23 October 2023, broadly aligned UAE TP provisions with the OECD TP Guidelines for Multinationals and Tax Administrations.

Key definitions to consider:

• Related parties
• Connected persons

These definitions are critical to understanding and ensuring compliance. Transactions involving related parties and connected persons must adhere to the arm’s length principle. Additionally, certain thresholds (discussed below) determine when such transactions must be disclosed.

For more information on this article, please click here.

TP Updates in the UAE CT Return Guide

The publication of the UAE CT return guide introduced several new updates and clarifications related to TP, including:

• Disclosure form thresholds:
  • Taxpayers with an aggregate related party transaction value exceeding AED 40 million recorded in financial statements or at market value, are required to prepare and file a disclosure form along with the CT return. Once the above threshold has been exceeded, any individual transaction with aggregate value per category that exceeds AED 4 million must be disclosed.
  • Taxpayers need to disclose transactions with Connected Persons where the aggregate payment or benefit exceeds AED 500,000 per Connected Person (together with its Related Parties).
     
• Adjustments:
  • Any TP adjustment that decreases the Taxable Income (i.e., downward adjustment) will be allowed only upon successful application to the FTA.
     
• Gains or losses on transfers:
  • Taxpayers must report realized gains or losses (in the current tax period) on prior related party transfers of assets or liabilities, relative to the market value of those transactions.

For further information on this update, please click here.

For further support, please contact our experts to help you with your TP compliance journey.

e-Invoicing

The Introduction of E-Invoicing in the UAE

The UAE will introduce a mandatory e-Invoicing regime for both business-to-business (“B2B”) and business-to-government (“B2G”) transactions starting July 1, 2026, based on the PEPPOL model.

Key highlights include:

• Adoption of the 5 Corner PEPPOL model for e-Invoicing, ensuring a decentralized and standardized framework for electronic document exchange.
   
• VAT Groups: Each member of a VAT group in the UAE should be connected to an Accredited Service Provider (“ASP”) individually, while using the group Tax Registration Number (“TRN”), to ensure all transactions are captured within the e-invoicing regime.
   
• Mandatory company registration by obtaining a Tax Identification Number (“TIN”), a key step to ensure compliance with the e-Invoicing requirements​​​​​​.

Recently, the MoF launched the official webpage for e-Invoicing in the UAE. The mandatory e-Invoicing regime will come into effect on July 1, 2026, for both B2B and B2G transactions.

Key steps to keep in consideration:

1. Budget for additional costs.
2. Identify stakeholders and form a project group.
3. Leveraging e-Invoicing for efficiency and cost savings.
4. Prepare to share your data.
5. Review your VAT setup.

If you would like to discuss how e-Invoicing will impact your business and how to get operationally ready for it, please reach out to our experts.
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For more information on this article, please click here or here.

Kingdom of Saudi Arabia ("KSA")

Publication of the Real Estate Transactions Tax ("RETT") Law

The RETT Law, issued under Ministerial Resolution No. 84 on 22 September 2024, has been published in the Official Gazette on 11 October 2024.

The law provides information on the following:

• Undocumented transactions
• Definition of a real estate company
• Responsibility for payment of RETT
• RETT exemption
• Time limit for assessment by the Zakat, Tax, and Customs Authority (“ZATCA”)
• Change in penalty provision

To access the Saudi Gazette report, please click here.

New Customs Services Fee Structure

ZATCA has issued a new decision regarding the Fee Rules on Customs Services Provided at Customs Ports. This decision includes updates on the fees applicable to customs services offered by ZATCA.

Key updates include:

• Waiving of export shipment related fees
• New fee structure for import calculations
• Customs fee for low value shipments

These changes aim to strengthen KSA exports, increase transparency for small and medium enterprises (“SMEs”), and align with Vision 2030’s goal of making KSA a global logistics hub.

For further information on this update, please click here.

Anti-Dumping Duties on Imports of Sulfonated Naphthalene Formaldehyde from China and Russia

The Saudi General Authority for Foreign Trade (GAFT) has decided to impose definitive anti-dumping duties on imports of sulfonated naphthalene formaldehyde from China and Russia for a period of 5 years. This was published on 24 December 2024 in Announcement No. (5). This decision applies anti-dumping duties of between 18.12% to 34% based on the goods CIF value immediately.

For further information, please find the GAFT notice here.

Update to HS Code Format for the Industrial Exemption

The Ministry of Industry and Mineral Resources has announced a significant upgrade to the customs tariff codes in industrial licenses, transitioning from the harmonized system of 10 digits to a 12-digit format.

This strategic move aims to enhance data accuracy and strengthen integration with relevant authorities, supporting the overall efficiency and transparency of the industrial sector.

The deadline to update the registered customs tariff codes in industrial licenses is January 31, 2025.

For more information on this article, please click here.

Announcement of Waves 15-18 for E-Invoicing Phase 2 Implementation

The ZATCA determined the criteria for selecting the targeted taxpayers in the 15th-18th wave for implementing the integration phase of e-Invoicing.

* The thresholds include revenues subject to VAT in 2022 or 2023.

Oman

Oman Harmonized System (“HS”) Code changes

Oman Customs have announced a new version of the GCC Unified Tariff. The tariff will change Oman’s HS code from 8 to 12 digits for all produces effective 1 January 2025. The rationale for this is for improved statistics and information on imports and exports, allowing the system to be more efficient for businesses and the customs authority.

Based on broad overview of Oman’s new tariff, the following points should be noted:

• The first 8 digits of each HS code remain the same.
   
• The customs duty rates assigned to each 8-digit tariff code remain the same.
   
• Most tariff codes have been expanded to subcodes (with the additional 4 digits) to be more specific to the products covered. Subcodes generally include:
  • More specific subcodes categorizing the product (e.g., laptops under 84 71 30 00 are split into separate subcodes for laptops 84 71 30 00 00 02
    and tablets 84 71 30 00 00 03).
  • Codes for “other” types of products characterized by “99 99” at the end.
     
• Some tariff codes remain the same with the addition of a “0000” at the end.
   
• Chapter 99 has been included which lists all hazardous items.

Note: Please note that these points are based on a broad view of the tariff and a line-by-line review has not been undertaken. It is recommended for businesses to review the HS codes relevant to them.

Next steps:

To prepare for the change, businesses should consider the following:

• Obtain a listing of all HS codes for goods imported into Oman.
   
• Undertake a reconciliation exercise to determine the new HS code as per the new tariff (if the listing is significant, it is recommended to take a top-value approach).
   
• Maintain a listing of the new HS codes for any repeat shipments.
   
• Communicate the new HS code changes in advance of any shipments to your customs broker / internal trade teams.
   
• Keep records of all imports and/or exports taking place after 1 January 2025.

We at A&M can assist you with any HS mapping requirements and planning activities required for the new change and hopefully identify a few cost-saving reclassification opportunities.

For more information on this article, please click here.

Bahrain

DMTT Rules

On December 15, 2024, Bahrain’s National Bureau for Revenue (“NBR”) issued the Executive Regulations for the DMTT. This follows the September release of Decree-Law No. 11 of 2024, introducing a 15% GMT for large Multinational Enterprises (“MNEs”)

These new regulations provide crucial clarifications on the DMTT framework.

For more information on this article, please click here.

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