GDT’s recent action on VAT on E-commerceOctober 24, 2022
As noted in a number of our previous tax alerts, implementation of VAT on e-commerce began in April 2022. Under the self-assessment regime, the regulations require that taxpayers apply the VAT reverse charge system to declare and pay 10% VAT to the General Department of Taxation (“GDT”) on any digital goods, services or e-commerce activities supplied by non-residents. Failure to comply with the regulations will result in additional tax, penalties, and interest being imposed on the undeclared items.
Recently, the GDT began taking action on this matter by reviewing what taxpayers declare in the e-filing system and comparing the amount declared for 14% Withholding Tax (“WHT”) with that declared for VAT reverse charges. If there are any discrepancies, the GDT will issue a Notice of Tax Assessment for the difference. We know of many taxpayers that have already received such a notice from the GDT.
Given the above, we strongly suggest that you carefully review your 14% WHT declarations to determine whether there are any items that would be considered as a digital good or service so that you can correctly declare the VAT reverse charges. Proper declaration of VAT reverse charges will not only save you from having to pay penalties and interest but also allow you to claim the declared VAT as an input credit.
- Notification No. 5735 GDT dated 16 February 2023 issued by the General Department of Taxation on “Annual Tax on Income Filing for 2022”
- February 27, 2023
- Notification No. 5367 GDT dated 14 February 2023 issued by the General Department of Taxation on “2022 Market Interest Rates for Loans”
- February 20, 2023
- Instruction No. 26118 GDT dated 28 October 2022 issued by the General Department of Taxation on “The Use of Exchange Rates for Self-Assessment Taxpayers”
- November 30, 2022
- Instruction No. 27185 GDT dated 14 November 2022 issued by the General Department of Taxation on “The hanging or displaying of the tax registration documents at the business premises”
- November 30, 2022
- Pension fund
- October 24, 2022