August 2021 Tax Newsletter


VAT Automotive Guide 

This new guide introduced by the FTA contains guidance about the VAT treatment of supplies made by motor vehicle dealers in the UAE including but not limited to the supply of new cars, the supply of used/ second-hand cars, supplies under warranty and the export and import of cars.

The guide does not include regular car financing, presumably due to the fact that the VAT treatment is straightforward. It reiterates that the profit margin scheme for used cars is optional, and discusses chain sales.


Circular on VAT Refund Mechanism for Real Estate Developers


The Zakat, Tax and Customs Authority ("ZATCA") issued Circular No. 2106002 on 30/06/2021 on the VAT refund mechanism for real estate developers in KSA. 

The application of VAT on transactions involving real estate and land in KSA has been amended in 2020 by virtue of Royal Order (A/84), where a Real Estate Transfer Tax (RETT) would apply instead. 

Ministerial Decision No. 1754 which was based on the Royal Order stipulates that ZATCA is to refund input VAT paid by licensed real estate developers. In this regard, the Circular clarifies that the refund process comprises of two steps: 

   •   Application to confirm eligibility to obtain VAT refund; 

   •   Application for refund of VAT.

The Circular further elaborates on the specific requirements for each step and includes practical examples. For instance, as part of the eligibility criteria, restrictions on the legal form and commercial activities of the real estate developer are imposed. 

It is also worth noting that all refund requests must be submitted within six months of the end of the calendar year relevant to the claim period. If the 6 month period has passed, the eligible person will loose his right to obtain the refund.


VAT Implementation in Kuwait 

There has been lots of speculation recently in Kuwait in regards to the introduction of additional taxes to plug the public finances gap.

Whether parliament and government will agree, or will leave it at the issuance of bonds, and sale of assets, remains to be seen.

The Minister of Finance's plan is to introduce Excise Tax and VAT in Kuwait as directly quoted here. There is no timeline given in the article. 

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