Operating a business internationally presents numerous challenges all around the globe, and the recent introduction of Value Added Tax (VAT) in GCC countries like UAE and KSA have just prepended more intricacies which all the companies need to adhere to, in order to operate in these geographies. Typically, VAT is applicable on any consumption falling under the boundaries of a particular jurisdiction.
There are several issues that may arise from VAT standpoint, which makes it utmost vital for any business to define their individual regulations where they expect their supplies to come from. There are various specific scenarios which define distinctive regulations in the GCC countries depending upon whether or not the goods are transported or dispatched. There is also a special regime acting as an exception to general rules for supplies of goods, predominantly based on “distance sales regime” under the European Union Directive 2006/112/EC, as amended, which allows taxable suppliers to remote-sell their inventory to clients or customers who are not registered for VAT in other GCC Country which has executed VAT, without the need to register and account for VAT where the taxable supplies don’t surpass the obligatory registration threshold in that Country. This bureaucratic measure may reap essential benefits for a lot of SMEs functioning across the GCC.Similarly, there are general rules defined by the GCC countries for supply of services along with a few exceptions.
Generally, the person in charge of accounting for VAT is the supplier itself, except the scenarios where the goods and services are received from a non-resident supplier. Specifically in the case of online or E-Comm suppliers, it has become a recent trend to involve a third party or marketplace in their supply chain to enhance the effectiveness and agility.
Various countries help in facilitating intra-regional trade by establishing peculiar measures in order to handle the administrative costs as well as simplifying the burdensome VAT compliance.
All the companies operating in the GCC need to consider VAT repercussions of their transactions, hence identifying apt VAT treatment of the supplies ensuring complete compliance to regulations. This would involve various engagements such as analyzing the supplies’ nature – goods or services, place of supply, existing place of residence, applicability of zero rate treatment (if applicable), recovery of input VAT, registration and other compliance regulations.
We understand your VAT requirements and provide customized assistance and support in VAT account creation, filing and refund in the GCC countries. In the cases where a client does not wish to have a VAT account opened, we support them with VAT filing and claiming refunds to support operation in the GCC.