VAT challenges in the UAE and Saudi Arabia

On 1st of January 2018 UAE and Saudi Arabia implemented the Value Added Tax (VAT). The implementation has challenged many companies in the region to adapt their accounting practices to meet the requirements of the VAT regime. Whilst the current VAT laws in UAE and Saudi Arabia have provided the legal framework for the introduction of VAT, they have not provided guidance on how companies should handle VAT in many fields of business, starting from the proper issuance of invoices and calculating the correct amount of VAT.

For both companies and the FTA alike, VAT Implementation in the UAE and Saudi Arabia is a very new experience. Given that there is a lack of literature and precedent on VAT matters in the UAE and Saudi Arabia, companies and FTA will have obvious challenges in determining and assessing VAT.

So what can we expect post VAT return?

We expect that many companies will receive incorrect VAT tax assessment by the Federal Tax Authority (FTA), particularly in industries where the implementation of the VAT is not straightforward.

So what are the steps a company can take if they receive an incorrect tax assessment?

1st Step: Request the FTA to reconsider its decision

Such request of re-consideration has to be made within 20 business days from the date the company was notified of the original decision of the FTA, and the FTA will have 20 business days from receipt of the request to provide its revised decision.

2nd Step: Objection to the Tax Disputes Resolution

In case of a negative decision by the FTA, the company can object to the Tax Disputes Resolution Committee within 20 business days from the date the company was notified of the FTA’s revised decision. The Committee shall give its decision within 20 business days from the receipt of the objection.

Our Services

VAT related services

Our VAT specialists, lawyers and tax consultants, with extensive experience in dealing with VAT in different jurisdictions worldwide are able to provide you with advice in all aspects of VAT, including:

  • Providing comprehensive advice for implementation of VAT, including registration with FTA (UAE) and GAZT (KSA)
    We can answer all your VAT related questions and provide you with a clear manual for your operational business (e.g. invoicing);
  • Filing of Periodical Returns and calculation of VAT liability in UAE and KSA
    We calculate the VAT liability in both jurisdictions UAE and KSA and file the periodical VAT Returns to the FTA and/or GAZT. You will not miss any deadline for filing of VAT Returns;
  • Representing before the FTA, the Tax Dispute Resolution Committee and the Court
    As GERMELA is both a legal and tax consultancy, we are in a unique position to assist you at each step of the appeal proceedings.

3rd Step: Filing a lawsuit before the Court​

As a final step, in case of an unsatisfactory decision by the Committee, the company can file a lawsuit before the competent court within 20 business days from the date of the notification of the Committee’s decision​.

It is important that the company has professional support by an experienced tax consultant and tax lawyer at each of the above-mentioned steps, in order to ensure to assert its rights against at any time.