29/06/2021

The Income and Sales Tax Department has completed a draft law amending the General Sales Tax Law for the year 2021, with the aim of harmonizing with international practices in the concept of sales tax being subject to goods and services by approving the principle of supply.

The draft law reduces the period for requesting refunds from 6 months to two months.

The Director-General of the Income and Sales Tax Department, Dr. Hossam Abu Ali, said in statements to Al-Mamlaka channel on Saturday that the preparation of the draft sales tax law was based on the principle of the government's commitment not to increase or impose any tax on the citizen, referring to the government's commitment to simplification, facilitation and addressing the challenges facing the economic sectors. .

“The amended General Sales Tax Law does not include imposing a tax or a tax amendment,” according to Abu Ali.

The amendment was based on two main axes, the first is the concept of supply, meaning that the base for tax collection will be the supply, that is, if the ownership of the commodity is transferred from one person to another or to another taxpayer by selling, or in any other way, it becomes a base for imposing sales tax, meaning that if there is any A person working to transfer the right to dispose of the goods and transfer them to another person to circumvent the payment of sales tax. This loophole is filled by law, and therefore any person who was competing with a taxpayer or a tax-compliant company in this amendment will close this, according to Abu Ali.

The second axis is related to sales tax refunds, which is one of the challenges and problems that economic sectors always demand to be addressed, linked to the speed of sales tax refunds.

For the economic sectors, the refunds are considered a source of cash flow, and here the amendment was based on two main principles in the speed of the refunds, according to Abu Ali.

He said that the first principle is to reduce the legal deadlines stipulated in the law. In the current sales tax law, the taxpayer, whether industrial or commercial, can request refunds after the lapse of 6 months, but this period will be reduced from 6 months to two months.

The second principle is related to the time limit given to the department to return these amounts according to the current law, which is 3 months, but according to the amendment, it will be reduced to one month.

Abu Ali pointed out that the refunds in the current situation are made through monitoring allocations, and therefore any refunds must be according to remittances and financial instruments obtained from the Ministry of Finance, and certain allocations may be monitored and in the event that economic activity increases and these refunds exceed these allocations, it is not possible to refund This increase, however, in the draft law, is collected from the original tax collected, and thus this amendment speeds up the process of refunds.

Abu Ali explained that the draft law came to prevent jurisprudence and clarify that the tax legislation in the sales tax law will be applied to the tax region, as for the regions outside the tax region that have special legislation such as Aqaba special economic zone and free zone, the text was accurate and clear in that these regions do not apply to the sales tax law.