- MENA tax authorities work to improve tax compliance
- GCC countries look to withholding taxes and indirect taxes to increase tax collections
Dubai,
18 March 2014:
According to tax practitioners and specialists participating in the
EY MENA Tax Conference 2014 held in Dubai, tax authorities across
MENA are implementing investment and taxpayer-friendly tax measures
to promote a competitive, business-friendly tax environment to
encourage tax compliance. At present, MENA companies benefit from low
tax rates, investment incentives and extensive tax treaty
arrangements, but are also expected to ensure full and correct tax
compliance with the tax laws and regulations.
The
conference will focus on the current dynamic tax environment in MENA
with presentations by experienced tax professionals from EY. The
event will include panel discussions with senior tax and finance
executives from leading companies to gain a broad perspective of
important tax developments and critical emerging tax issues. The
conference will also address evolving fiscal and tax policies and
considered the key challenges faced by taxpayers in various MENA
countries.
Sherif
El-Kilany, EY MENA Tax Leader, said: “Foreign direct investments
are seeing a resurgence across MENA, especially in the GCC. The
regional markets offer critical mass, higher purchasing power as well
as some of the largest infrastructure and government investment
programs. All these factors make the GCC and the overall MENA region
very attractive for investment and doing business. The economic
incentives are enhanced by the business-friendly tax environment that
continues to attract the best companies to establish themselves and
do business here.”
The
key theme at the event will include the increasing focus on transfer
pricing (TP) and thin capitalization rules as well as withholding tax
for non-residents. The conference also considered the importance of
correct tax law interpretation and the effective use of tax treaty
arrangements to achieve the best tax outcomes.
Withholding
tax in Saudi Arabia, Kuwait and Oman
Withholding
tax compliance is being stringently enforced
in several MENA countries. For Saudi-listed companies, an authorized
person acting as broker or agent for non-resident investors is
required to deduct 5% WHT on dividends paid to these investors. In
Kuwait, 15% withholding tax (WHT) on dividends need to be paid by
companies listed on the Kuwait Stock Exchange. Oman has
seen an increasing enforcement of withholding tax compliance by
foreign companies and service providers with no permanent
establishment in Oman.
Availing
double tax treaty relief
As
at 31 January 2014, Saudi Arabia has 29 effective double tax treaties
with a further 22 treaties in process. In Qatar, 57 tax treaties are
currently in force and 34 tax treaties have been ratified and await
implementation. In Saudi the tax authorities now allow taxpayers to
settle withholding tax based on the rates provided in tax treaties,
if such payments are supported by prescribed documents. In Qatar,
taxpayers may apply for pre-approval to avail tax treaty withholding
tax rates.
In
both Saudi Arabia and Qatar, taxpayers may also use the pay and claim
system to avail tax treaty relief. However, it is important to ensure
that all the required information and documentation is carefully
prepared and submitted with the refund application so that long
refund delays are avoided.
“The
need for effective management of taxes in these emerging and dynamic
markets to avoid unnecessary costs and risks and maximize
opportunities is the primary concern for corporations.
Effective controls, robust processes, standardized procedures and the
use of appropriate technology can all help to improve accuracy and
reduce risks.
By identifying trends and anticipating changes in policy, legislation
and enforcement, businesses can plan for adverse impacts, take
proactive steps to adapt to changes and even engage with policymakers
to contribute their perspective to the legislative process. Companies
today are beginning to take this opportunity to get ahead of the
curve on tax changes very seriously,”
concluded Sherif.
