Intra-GCC transactions are the transactions (sales and purchases) between member states of GCC.
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE have signed the GCC VAT Agreement. VAT is all set to be implemented in across GCC from January 2018.
Exports outside the country under the GCC VAT Law are zero-rated. But what about the transaction export transaction between the GCC States?
Taxpayers have many questions with respect to such transactions. Some of them are listed below:
- How and where will VAT be collected for Intra-GCC transactions?
- Will the taxpayer be able to claim recoverable input of VAT on purchases from member states? On what conditions recoverable input VAT be claimed?
- In what manner the supply of goods and supply of services happen between member states under GCC VAT Law?
In order to simplify and easily understand the Intra-GCC transactions we will split them into two different topics:
- Intra-GCC Transaction of Goods.
- Intra-GCC Transaction of Services.
Let us discuss each in detail.
1. Intra-GCC Transactions of Goods
Similar to the exports of goods outside GCC, the intra-GCC transactions will be zero-rated. But in this case, the buyer will pay VAT under reverse charge mechanism.
Under reverse charge mechanism, a buyer pays will VAT as if he has sold the goods to himself. The buyer can conditionally claim the input of VAT paid in the same return and thus the effect o the VAT is NIL.
If goods are transhipped from one state to another VAT is applicable.
The Input of such tax cannot be claimed in the State of origin but is claimed at the final destination of goods in the member state where the buyer is located.
If the goods were previously imported to your country for business purposes and then exported to another member state then also the VAT is applicable.
Thus, The excess of input claimed by you on such imports has to be paid back to the tax authorities.
2. Intra-GCC Transactions of Services
Same as the case of goods, if a seller sells services to his customer who is registered under VAT in another member state, the buyer will charge himself for VAT under reverse charge.
For an Intra-GCC supply of services, the VAT applicability is subject to buyer’s registration status.
When the customer of other member state is registered, VAT will be applicable on the reverse charge basis in the state of the customer.
But if the customer is a non-taxable person then VAT will be collected in the state of the supplier.
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our mainland company goods sold to saudi registered buyer.. we charged him VAT , is it ok??
we had not treated as export and not issued zero rated invoice as buyer did not gave us EXIT PAPER AND EXPORT DECLARATION ., goods went to saudi via local transport company via road.
Regards
murtaza
Will check and revert.
Dear Fahim sir
Greetings!!
our saudi registered custom to whom we sold goods from dubai mainland with VAT
As he shipped goods via cargo not giving us export papers required like exit paper , export declaration etc..
is our treatment ok to charge him vat as usual
regards
Murtaza
We are VAT registered company in Dubai and importing the goods from UK and selling to Oman client. Kindly confirm whether the import vat is claimed for this import to export of the goods. Kindly share the details of the available links to refer.
There are two scenarios in your type of business.
1. If good imported from the UK enter UAE and you pay VAT and then export the same to Oman. In this case, you can claim ITC.
2. It doesn’t enter UAE borders and directly goes to Oman then VAT will be payable by the importer(buyer) in Oman not by you.
Our client (in Bahrain) has given us (in Saudi Arabia) to render a service in OMAN for one of their clients. So will we raise a VAT invoice or is the invoice going to be Zero-rated
Which country are you located in?
Hello Sir,
First of all thanks for the wonderful information.
My Question is related to Intra-GCC-Supply of Services.
We are the company registered under UAE Vat Laws and have special status of Designated Zone.
We are now supplying services in another GCC Countries like Saudi and Bahrain
Just wanted to know whether the similar provis will apply to us ( DZ’s) ?
Regards
The rules of Export of services will be applicable.
Dear Sir,
We are a VAT-registered company in Dubai Freezone, and we will be selling goods to a Client in Bahrain. (The goods will come from our Supplier in Germany.)
Should we charge our Client the VAT for this transaction?
Thanks,
Leah
We are based in KSA.
We want to export material to Kuwait where VAT is not implemented yet. That material we are going to export is, imported by us from Germany on which we had paid VAT and customs duty. My question is as the VAT is not implemented in Kuwait yet, should we charge VAT in our invoice to Kuwait importer or it is exempted or zero rated?
Export is zero-rated. If you have already paid VAT and the good are into Saudi borders then you can include the VAT in customer price otherwise it will be a loss of amount. Legally, export is zero-rated.
Sr.NO Text Remarks
Step1 We are in UAE -Placing order in KSA (Manufacturer )
Step2 Manufacturer (KSA) will produce the goods and bill to us in UAE For us in UAE – in order to claim as import we need to have Physical moment of goods from KSA TO UAE-which is not happeing
Step3 Goods will be delivered in KSA itself ,as we have customer in KSA For Manufacturer if he is delivering goods in KSA ,he need to charge VAT .,which we don’t want to happen –
We will have to look into this.
Sir,
We are a company located in Bahrain and exporting to KSA. The goods are directly reaching from Europe to Saudi and they have to pay VAT on Saudi Boarder.
We are registered for VAT in Bahrain. Do we have to register for VAT in KSA ?
Thanks
As per the VAT ruling, Export is out of scope. Hence it is not necessary for you to register in KSA.
The Buyer has to pay VAT in his local land at the custom port.
Sir
We are manufacturing goods and selling it to KSA from freezone zone area in dubai , is vat applicable for selling the goods to KSA ?
Selling to KSA is export. Your client imports goods in KSA and pays VAT through Reverse charge mechanism.
Sir,
We are a Tax registered person and located in Bahrain .We are purchasing from U.A.E. How wil treat this in Bahrain ie,Zero rated , Exempt Purchase ,Reverse Charge or has to pay tax and Have to show this purchase value in Bahrain Vat return.
You are basically importing goods from UAE and hence reverse charge is applicable. You will pay VAT while import and can this Input VAT will be adjusted against your Output VAT liability.
Sir,
Our consultant saying that when purchase from UAE ,It is in zero rated .So he is saying no need to mention in Bahrain vat return.But my doubt ,our transportation agent is paying customs duty and vat together and they dont give any customs and vat paid document.They are issuing freight charges bill to us(all amount including in freight charges).so how we can adjust this input vat(gcc purchase) with output vat?
According to the best of my knowledge and the details provided by you, it seems that your company is not directly importing goods. Hence, the import is done by the agent. The agent then issues a local invoice to your company in Bahrain.
If it is the above case, Your invoice includes prices inclusive of VAT. You need to report the invoice given by the agent directly into your VAT return. Thus, you can only claim input of whatever VAT is given in the invoice provided by your agent.
Thank you sir for your valuevable reply.
We have a supplier from KSA and they charge us a Tax Invoice with 15%, how can we clain the Intra GCC Taxable Purchases?
Thanks
According to the best of my knowledge, Intra GCC transactions are Zero Rated. Hence, your supplier cannot charge you VAT on the invoice. Moreover, Kuwait will implement VAT in April 2021.
Similar to the exports of goods outside GCC, the intra-GCC transactions will be zero-rated. But in this case, the buyer will pay VAT under the reverse charge mechanism.
Under the reverse charge mechanism, a buyer pays will VAT as if he has sold the goods to himself. The buyer can conditionally claim the input of VAT paid in the same return and thus the effect o the VAT is NIL.
salam. we are a company located in UAE.. and goods seeling to oman. we will raise a VAT invoice or is the invoice going to be Zero-rated.
and how to treatment transaction entry in vat201. plz
If the customer is registered under VAT in Oman then Zero-rated otherwise 5% VAT will be applicable on supply. If the value of the supply is above the threshold then the supplier has to take a VAT registration in that country and then he has to charge VAT.
Hi,
We are a company registered in DZ in UAE. We often supply goods/services to other implementing states of gulf like OMAN.
What will be the tax implication on us if the customer is registered ?
Is it export of Goods/services for us ? or it is Our-of-scope ?
If the customer is registered under VAT in Oman then Zero-rated otherwise 5% VAT will be applicable on supply. If the value of the supply is above the threshold then the supplier has to take a VAT registration in that country and then he has to charge VAT.
We in UAe provide digtal marketing services to customer in Saudi. should we charged to vat on not. Is special supply rule applied here?
According to Article 31 of Executive Regulation, Your services will be outside of the scope of UAE VAT and the service would be taxable in the receiving state, with the recipient accounting for the tax under the reverse charge mechanism.
Our company located in UAE and Bahrain under vat registered.UAE co imports items from UK.Import Inv issued to UAE co name and delivery direct to Baharin from UK and duty paid in Bahrain Customs Dept.Vat not paid in Bahrain.So how will we treat this in Bahrain VAT return.
Our company located in UAE and Bahrain under vat registered.UAE co imports items from UK.Import Inv issued to UAE co name and delivery direct to Baharin from UK and duty paid in Bahrain Customs Dept.Vat not paid in Bahrain.So how will we treat this in Bahrain VAT return.
If goods are imported into the UAE, by default the place of supply of import is the UAE. But if the importer expects to transfer the goods into another GCC state, special conditions apply.
(i) The importer should pay import VAT without using the reverse charge, and cannot recover the VAT.
(ii) The import VAT can only be recovered in the GCC state where the goods are transferred.