Chapter Two

Deemed Supply

Article (11)

The Cases of Deemed Supply

The following cases shall be considered as Deemed Supply:

• A supply of Goods or Services, which constituted the whole assets of a Taxable Person or a part thereof, but are no longer considered to be as such, provided that the supply was made without Consideration.
• The transfer by a Taxable Person of Goods that constituted a part of his business assets from the State to another Implementing State, or from the Taxable Person’s business in an Implementing State to his Business in the State, except in the case where such transfer:
  • Is considered as temporary under the Customs Legislation.
  • Is made as part of another Taxable Supply of these Goods.
• A supply of Goods or Services for which Input Tax may be recovered but the Goods or Services were used, in part or whole, for purposes other than Business, and such supply shall be considered as deemed only to the extent of the use for non-business purposes.
• Goods and Services that a Taxable Person owns at the date of Tax Deregistration.

Article (12)

Exceptions for Deemed Supply

A supply is not considered as deemed in the following cases:

• If no Input Tax was recovered for the related Goods and Services.
• If the supply is an Exempt Supply.
• If the recovered Input Tax has been adjusted for the Goods and Services pursuant to the Capital Assets Scheme.
• If the value of the supply of the Goods, for each Recipient of Goods within a 12-month period, does not exceed the amount specified in the Executive Regulation of this Decree-Law, and the Goods were supplied as samples or commercial gifts.
• If the total Output Tax due for all the Deemed Supplies per Person for a 12-month period is less than the amount specified in the Executive Regulation of this Decree-Law.

Title Four

Tax Registration and Deregistration

Article (13)

Mandatory Tax Registration

• Every Person, who has a Place of Residence in the State or an Implementing State and is not already registered for Tax, shall register in the following situations:
  • Where the total value of all supplies referred to in Article (19) exceeded the Mandatory Registration Threshold over the previous 12-month period.
  • Where it is anticipated that the total value of all supplies referred to in Article (19) will exceed the Mandatory Registration Threshold in the next thirty (30) days.
• Every Person, who does not have a Place of Residence in the State or an Implementing State and is not already registered for Tax, shall register for Tax if he makes supplies of Goods or Services, and where no other Person is obligated to pay the Due Tax on these supplies in the State.
• The Executive Regulation of this Decree-Law shall specify the time limits that a Person has to inform the Authority about his liability to register for Tax and the effective date of Tax Registration.

Article (14)

Tax Group

• Two or more persons conducting Businesses may apply for Tax Registration as a Tax Group if all of the following conditions are met:
  • Each shall have a Place of Establishment or Fixed Establishment in the State.
  • The relevant persons shall be Related Parties.
  • One or more persons conducting business in a partnership shall control the others.
• The Executive Regulation of this Decree-Law will determine the instances where the Authority may reject the application to register a Tax Group.
• Any Person conducting Business is not allowed to have more than one Tax Registration Number, unless otherwise prescribed in the Executive Regulation.
• If Related Parties do not apply for Tax Registration as a Tax Group under Clause (1) of this Article, the Authority may assess their relation based on their economic, financial and regulatory practices in business and register them as a Tax Group if their relation was proved thereto according to the controls and Conditions specified by the Executive Regulation of this Decree-Law.
• The Authority may deregister the Tax Group registration in accordance with this Article as per the conditions specified in the Executive Regulation of this Decree-Law.
• The Authority may make changes to the Persons registered as a Tax Group by adding or removing Persons as requested by the Taxable Person or in accordance with the instances mentioned in the Executive Regulation.

Article (15)

Registration Exceptions

• The Authority may except a Taxable Person from mandatory Tax Registration upon his request if his supplies are only subject to the zero rate.
• Anyone excepted from Tax Registration according to Clause (1) of this Article shall inform the Authority of any changes to his Business that would make him subject to Tax under this Decree-Law pursuant to the time limits and procedures determined in the Executive Regulation of this Decree-Law.
• The Authority shall have the right to collect any Due Tax and Administrative Penalties for the period of exception where that Taxable Person was not entitled to the exception.

Article (16)

Tax Registration of Governmental Bodies

Government Entities which shall be determined in a Cabinet Decision issued under Clause (2) of Article (10) of this Decree-Law, shall apply for Tax Registration and may not be Deregistered unless by a Cabinet Decision at the suggestion of the Minister.

Article (17)

Voluntary Registration

Any Person who is not obligated to apply for Tax Registration according to this Chapter may apply for Tax Registration in the following cases:

• If he proves, at the end of any given month, that the total value of supplies referred to in Article (19) of this Decree-Law or the expenses which are subject to Tax and were incurred during the previous 12-month period, has exceeded the Voluntary Registration Threshold.
• At any time that he anticipates that the total value of supplies stipulated in Article (19) of this Decree-Law or the expenses which are subject to Tax that will be incurred, will exceed the Voluntary Registration Threshold during the coming 30-day period.

Article (18)

Tax Registration for a Non-Resident

A Non-resident Person may not take the value of Goods and Services imported into the State to determine whether he is entitled to apply for Tax Registration if the calculation of Tax for such Goods or Services is the reponsibility of the Importer pursuant to Clause (1) of Article (48) of this Decree-Law.

Article (19)

Calculating the Tax Registration Threshold

To determine whether a Person has exceeded the Mandatory Registration Threshold and the Voluntary Registration Threshold, the following shall be calculated:

• The value of Taxable Goods and Services.
• The value of Concerned Goods and Concerned Services received by the Person unless covered by Clause (1) of this Article.
• The value of the whole or relevant part of Taxable Supplies that belong to said Person if he has, wholly or partly, acquired a Business from another Person who made the supplies.
• The value of Taxable Supplies made by Related Parties pursuant to the cases stated in the Executive Regulation of this Decree-Law.

Article (20)

Capital Assets

The supply of Capital Assets belonging to the Person shall not be taken into account to determine whether a Person in Business exceeds the Mandatory Registration Threshold or Voluntary Registration Threshold.

Article (21)

Tax De-Registration Cases

A Registrant shall apply to the Authority for Tax Deregistration in any of the following cases:

• If he stops making Taxable Supplies.
• If the value of the Taxable Supplies made over a period of (12) consecutive months is less than the Voluntary Registration Threshold and said Registrant does not meet the condition stipulated in Clause (2) of Article (17) of this Decree-Law.

Article (22)

Application for Tax De-Registration

A Registrant may apply to the Authority for Tax Deregistration if the value of his Taxable Supplies during the past (12) months was less than the Mandatory Registration Threshold.

Article (23)

Voluntary Tax De-registration

A Registrant under Article (17) may not apply for Tax Deregistration within (12) months of the date of Tax Registration.

Article (24)

Procedures, Controls and Conditions of Tax Registration and De-registration

The Executive Regulation of this Decree-Law shall determine the procedures, controls and conditions for Tax Registration, Tax deregistration and rejection of applications for Tax Registration and Deregistration as stipulated in this Title.

Title Five

Rules Pertaining to Supplies

Chapter One

Date of Supply

Article (25)

Date of Supply

Tax shall be calculated on the date of supply of Goods or Services, which shall be earlier of any of the following dates:

• The date on which Goods were transferred, if such transfer was under the supervision of the supplier.
• The date on which the Recipient of Goods took possession of the Goods, if the transfer was not supervised by the supplier.
• Where goods are supplied with assembly and installation, the date on which the assembly or installation of the Goods was completed.
• The date on which the Goods are Imported under the Customs Legislation.
• The date on which the Recipient of Goods accepted the supply, or a date no later than (12) months after the date on which the Goods were transferred or placed under the Recipient of Goods disposal, if the supply was made on a returnable basis.
• The date on which the Services were completed.
• The date of receipt of payment or the date on which the Tax Invoice was issued.

Article (26)

Date of Supply in Special Cases

• The date of supply of Goods or Services for any contract that includes periodic payments or consecutive invoices is the earliest of any of the following dates, provided that it does not exceed one year from the date of the provision of such Goods and Services:
  • The date of issuance of any Tax Invoice.
  • The date payment is due as shown on the Tax Invoice.
  • The date of receipt of payment.
• The date of supply, in cases where payment is made through vending machines, shall be the date on which funds are collected from the machine.
• The date of Deemed Supply of Goods or Services is the date of their supply, disposal, change of usage or the date of
• The date of a supply of a voucher is the date of issuance or supply thereafter.

Chapter Two

Place of Supply

Article (27)

Place of Supply of Goods

• The place of supply of Goods shall be in the State if the supply was made in the State, and does not include Export from or Import into the State.
• The place of supply of installed or assembled Goods if exported from or imported into the State shall be:
  • In the State if assembly or installation of the Goods was done in the State.
  • Outside the State if assembly or installation of the Goods was done outside the State.
• The place of supply of Goods that includes Export or Import shall be as follows:
  • Inside the State in the following instances:
    • If the supply includes exporting to a place outside the Implementing States.
    • If the Recipient of Goods in an Implementing State is not registered for Tax in the state of destination, and the total exports from the same supplier to this state does not exceed the mandatory registration threshold for said state.
    • The Recipient of Goods does not have a Tax Registration Number in the State, and the total exports from the same supplier in an Implementing State to the State exceeds the Mandatory Registration Threshold.
  • Outside the State in the following instances:
    • The supply includes an Export to a customer registered for Tax purposes in one of the Implementing States.
    • The Recipient of Goods is not registered for Tax in the Implementing State to which export is made, and the total exports from the same supplier to this Implementing State exceeds the mandatory registration threshold for said state.
    • The Recipient of Goods does not have a Tax Registration Number and the Goods are Imported from a supplier registered for Tax in any of the Implementing States from which import is made, and the total imports from the same supplier to the State do not exceed the Mandatory Registration Threshold.
• Goods shall not be treated as exported outside the State and then reimported if such Goods are supplied in the State and this supply required that the Goods exit and then re-enter the State according to the instances specified in the Executive Regulation of this Decree-Law.

Article (28)

Place of Supply of Water and Energy

• The supply of water and all forms of energy specified in the Executive Regulation of this Decree-Law through a distribution system, shall be considered as done in the Place of Residence of the Taxable Trader in case the distribution was conducted by a Taxable Person having a Place of Residence in the State to a Taxable Trader having a Place of Residence in an Implementing State.
• The supply of water and all forms of energy specified in the Executive Regulation of this Decree-Law through a distribution system, shall be considered to have occurred at the place of actual consumption, if distribution was conducted by a Taxable Person to a Non-Taxable Person.

Article (29)

Place of Supply of Services

The place of supply of Services shall be the Place of Residence of the Supplier.

Article (30)

Place of Supply in Special Cases

As an exception to what is stipulated in Article (29) of this Decree-Law, the place of supply in special cases shall be as follows:

• Where the Recipient of Services has a Place of Residence in another Implementing State and is registered for Tax therein, the place of supply shall be the Place of Residence of the Recipient of Services.
• Where the Recipient of Services is in Business and has a Place of Residence in the State, and the Supplier does not have a Place of Residence in the State, the place of supply shall be in the State.
• For the Supply of Services related to Goods, such as installation of Goods supplied by others, the place shall be where said Services were performed.
• For the Supply of means of transport to a lessee who is not a Taxable Person in the State and does not have a TRN in an Implementing State, the place shall be where such means of transport were placed at the disposal of the lessee.
• For the Supply of restaurant, hotel, and food and drink catering Services, the place shall be where such Services are actually performed.
• For the Supply of any cultural, artistic, sporting, educational or any similar services, the place shall be where such Services were performed.
• For the Supply of Services related to real estate as specified in the Executive Regulation of this Decree-Law, the place of supply shall be where the real estate is located.
• For the Supply of transportation Services, the place of supply shall be where transportation starts. The Executive Regulation of this Decree-Law shall specify the place of supply for transportation Services if the trip includes more than one stop.

Article (31)

Place of Supply of Telecommunication and Electronic Services

• For telecommunications and electronic Services specified in the Executive Regulation of the Decree-Law, the place of supply shall be:
  • In the State, to the extent of the use and enjoyment of the supply in the State.
  • Outside the State, to the extent of the use and enjoyment of the supply outside the State.
• The actual use and enjoyment of all telecommunications and electronic Services shall be where these Services were used regardless of the place of contract or payment.

Chapter Three

Place of Residence

Article (32)

Place of Establishment

The Place of Residence of the supplier or Recipient of Services shall be as follows:

• The state in which the Person’s Place of Establishment is located or where he has a Fixed Establishment, provided that he does not have a Place of Establishment or owns a Fixed Establishment in any other state.
• The state in which the Person’s Place of Establishment is located or where he has a Fixed Establishment that is the most closely related to the supply if he has a Place of Establishment in more than one state or has Fixed Establishments in more than one state.
• The state in which the usual Place of Residence of the Person is located if he does not have a Place of Establishment or a Fixed Establishment in any state.

Article (33)

The Agent

The Place of Residence of an agent shall be regarded as the Place of Residence of the principal in the following two cases:

• If the agent regularly exercises the right of negotiation and enters into agreements in favor of the principal.
• If the agent maintains a stock of Goods to fulfil supply agreements for the principal regularly.

Chapter Four

Value of Supply

Article (34)

Value of Supply

The value of supply of Goods or Services for Consideration shall be as follows:

• If the entire Consideration is monetary, the value of the supply shall be the Consideration less the Tax.
• If all or part of the Consideration is not monetary, the value of the supply is calculated as the overall monetary part plus the market value of the non-monetary part of the Consideration, and shall not include the Tax.
• For Services received by the Taxable Person who is obligated to calculate the Tax in accordance with Clause (1) of Article (48) of this Decree-Law, the value of the supply shall be equal to the market value of the consideration without addition of the Tax on that supply.
• If the Consideration is related to matters other than the supply of Goods or Services, the value of the supply shall be equal to the part of the Consideration that is related to such supply as stated in the Executive Regulation of this Decree-Law.

The Executive Regulation of this Decree-Law shall specify the rules to determine the market value.

Article (35)

Value of Import

The Import value of Goods consists of:

• The customs value pursuant to Customs Legislation, including the value of insurance, freight and any customs fees and Excise Tax paid on the Import of the Goods. Tax shall not be included in the Value of the Supply.
• If it is not possible to determine the value pursuant to Clause (1) of this Article, the value shall be determined based on alternate valuation rules stated in the applicable Customs Legislation..

Article (36)

Value of Supply for Related Parties

As an exception to Articles (34) and (35) of this Decree-Law, the value of the supply or Import of Goods or Services between Related Parties shall be considered equal to the market value if the following conditions are met:

• The value of the supply is less than the market value.
• If the supply is a Taxable Supply and the Recipient of Goods or Recipient of Services does not have the right to recover the full Tax that would have been charged to such supply as Input Tax.

Article (37)

Value of Deemed Supply

As an exception to Articles (34) and (35) of this Decree-Law, the value of the supply in the case of a Deemed Supply when the Taxable Person purchases Goods or Services to make Taxable Supplies but does not use those Goods or Services for that purpose, will be equal to the total cost incurred by the Taxable Person to make this Deemed Supply of Goods or Services.

Article (38)

Tax-Inclusive Prices

For Taxable Supplies, the advertised price shall include the Tax. Instances where prices do not include the Tax shall be determined by the Executive Regulation of this Decree-Law.

Article (39)

Value of Supply in case of Discount or Subsidies

When discounts are made before or after the Date of Supply or subsidies provided by the State to the supplier for that supply, the value of the supply shall be reduced in proportion to such discounts or subsidies.

The Executive Regulation of this Decree-Law shall specify the conditions and restrictions for calculating the Tax when the discount is made.

Article (40)

Value of Supply of Vouchers

The value of supply of a Voucher is the difference between the consideration received by the supplier of the Voucher and the advertised monetary value of the Voucher.