Mukeet Iqbal

Doing the right thing. So important on a personal and professional front.

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Whether you are a freezone or onshore company, you face having to determine when your sales count as revenue for Corporation Tax purposes. It’s not simple. Today in my column in The National. If you have a question, contact me. #GulfTaxAccountingGroup #GTAG #taxation #taxes #tax #economics #Dubai #UAE #GCC #finance #emergingmarkets #BEPS  https://lnkd.in/d7x8nHZe

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Tax Time – Insights into the Saudi Tax Scene #1 As part of my commitment to sharing insights into the Saudi tax environment, I am pleased to kick off a series of weekly updates. Recently, I had the privilege of participating in a panel discussion at the Jersey Finance event in Jeddah, where we examined significant tax and zakat developments impacting family business structures in the Kingdom. The following is a synopsis of the key points raised: A proposed tax law, expected to be finalized in 2024, introduces several considerations for family businesses, including a refined concept of 'place of effective management' and its tax repercussions for offshore entities, a 'look-through' approach for certain funds and partnerships, capital gains tax implications upon divestment, the treatment of transactions with preferential tax jurisdictions, reduced withholding tax rates, and risks associated with mergers, domiciliation, and; interestingly for 'natural persons' a potential personal income tax. Revised zakat regulations, effective from this year, offer a precise computation of the zakat base, minimum zakat obligations, specific guidelines for funds, and, notably, exemptions for philanthropic organizations, charities, non-profits, waqfs, and endowments under certain conditions. With the enforcement of transfer pricing regulations, family businesses must now scrutinize group and related party arrangements more closely. This includes evaluating interest-free loans, group services, and family office support for entities both within and outside the Kingdom, ensuring compliance with the 'arm's length' principle for goods and services. Amendments to the real estate transaction tax law provide relief for in-kind contributions to entities and funds, facilitating strategic planning for real estate assets. Family groups with international structures must consider the BEPS Pillar 2 initiative, which mandates a global minimum tax of 15%. This is particularly relevant for investments in low-tax jurisdictions. The introduction of tax in the UAE and the use of special purpose entities in jurisdictions like ADGM or DIFC requires careful consideration to meet economic substance requirements. This is also applicable to family groups with arrangements in other jurisdictions traditionally utilized for legal, tax, and family succession planning. The conversation will continue next week with a focus on tax issues relevant to venture capital and private equity in Saudi Arabia. The insights shared herein are personal and do not represent the views of my employer. They are intended for general informational purposes and should not be construed as professional tax advice. #sauditax #familybusiness #zakat #transferpricing #internationaltax #corporatetax #bepspillar2 #taxplanning #saudiarabia #uae

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Tax Times– Insights into the Saudi Tax Scene #2– Venture capital and private equity tax concerns As Saudi Arabia strides towards its Vision 2030, the venture capital and private equity sector emerges as a pivotal force in economic growth. Understanding the tax landscape is crucial for investors and fund managers in this dynamic market. Investors, particularly Saudis and GCC nationals, face a 2.5% zakat on investments and income from share sales. If investments route through offshore entities, a 5% withholding tax on dividends and a 20% capital gains tax on share sales apply. Key considerations for stakeholders include creating a tax framework conducive to lucrative exits, aligning corporate and tax regulations with global standards, and ensuring predictable tax outcomes for IPOs. This alignment is essential for financing emerging companies and aligning venture capital exits. Other specific KSA considerations include zakat obligations, VAT and RETT implications for real estate funds, and the tax treatment of various income streams like share of income, carried interest, consulting, management and performance fees. Recent zakat regulations and the draft of the new tax law, pending publication, aim to address these issues. The proposed law covers rules for funds, foreign partnerships, redomiciliation, hybrid instruments, mergers, and tax relief, signaling a move towards a more investor-friendly tax regime. These reforms reflect KSA's proactive stance in refining its fiscal environment to bolster venture capital and private equity investments, potentially leading to increased capital inflows and diversified economic growth. What are your thoughts on these developments? Next week, we will continue the conversation with a focus on tax considerations for non-resident contractors engaged in construction and large-scale projects in Saudi Arabia.   Disclaimer: The insights shared herein are personal and do not represent the views of my employer. They are intended for general informational purposes and should not be construed as professional tax advice. #venturecapital #privateequity #saudiarabia #taxation #economicgrowth #Vision2030 #zakat #transferpricing #internationaltax #corporatetax #pillar2 #taxplanning #saudiarabia #withholdingtax #taxplanning #fundmanagers

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Discover the latest in tax and zakat at the #EYKSA Annual Tax/Zakat Seminar, where I'll be moderating a session covering updates in corporate income tax, withholding tax laws and practices. Secure your spot today! https://lnkd.in/dGg8mbSt #EYTaxSeminar #IncomeTax #Zakat #VAT #EYMENA #SaudiArabia

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Our GCC IPO+ Watch Q1 2024  is out now! Tadawul continues to be the most active exchange in the GCC with 60% of IPOs taking place on Nomu, its parallel market. Read more about the #IPO watch of #pwc published on #zawya https://lnkd.in/d7yfePnV

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I look forward to presenting on the most recent IFRS updates from a tax accounting perspective at our upcoming events in Dubai and Abu Dhabi. Register today! #Deloitte #IAS12 #IFRS #TaxAccounting #Pillar2

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How are digital technologies empowering Transformation Management Offices? Explore how to tackle transformation challenges to enhance efficiency and drive sustainable growth for your organisation in our latest report: https://pwc.to/4aSUPJS #Digitaltransformation PwC Middle East

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Tax Time – Insights into the Saudi Tax Scene In the ever-evolving landscape of Saudi taxation, staying informed is crucial for businesses and professionals. By keeping up-to-date with these changes, companies can navigate the complexities of the tax system and position themselves for success in the dynamic Saudi market. Stay tuned as I embark on a journey to explore these through a series of weekly updates. I’ll also share practical steps that businesses can take to adapt to these tax and related laws. Disclaimer: The information provided will be shared on a personal basis and does not reflect the views of my employer. It is intended to offer general guidance only and should not be considered professional tax advice. Stay tuned. #Sauditax #TaxInsights #Internationaltax #TaxStrategy #TaxUpdates

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Saudi Arabia Tax Highlights for 2024 for Businesses and Investors As Saudi Arabia continues to solidify its position as a pivotal economic hub, staying informed about the tax landscape is crucial for companies and investors aiming to optimize their strategies in the Kingdom. Here’s an in-depth look at some of the most significant updates in 2024: 1️⃣ Corporate Taxation:  - Standard Tax Rate: The corporate tax rate remains steady at 20%. However, the oil and hydrocarbon sectors face unique rates ranging from 50% to 85%, based on the scale of capital investment. - Natural Gas Investment: Investors in natural gas activities are taxed at a flat rate of 20%. 2️⃣ Capital Gains & Dividends:  - A 20% tax applies to capital gains from the disposal of shares in a Saudi resident company by nonresidents, though exemptions exist for certain publicly traded shares. - Dividend Income: Dividends received by Saudi resident companies are exempt if ownership criteria are met, providing opportunities for efficient investment structures. 3️⃣ Loss Management:  - Tax losses may be carried forward indefinitely, subject to a 25% annual offset limit against taxable profits. This provision comes with specific conditions, such as ownership continuity requirements to prevent abuse of loss carryforwards. 4️⃣ Compliance & Filing:  - Tax Filing: Returns must be submitted online within 120 days from the end of the fiscal year. Companies with taxable income exceeding SAR 1 million must have returns certified by a licensed accountant. - Contract Reporting: All contracts with a value of SAR 100,000 or more must be reported to the Zakat, Tax and Customs Authority (ZATCA) within three months. 5️⃣ Value Added Tax (VAT):  - Standard Rate: The VAT rate stands at 15%, with zero-rating applicable to exports and other specified services. - E-Invoicing: Compliance with mandatory electronic invoicing is critical, ensuring seamless integration with ZATCA systems for validation. 6️⃣ Withholding Tax:  - For Non-Residents: 5% on dividends and interest, and 15% on royalties. Other payments, such as technical service fees and rent, are also subject to withholding tax, with rates varying per the type of payment. 7️⃣ Zakat Regulations: - Zakat applies to Saudi and GCC-owned entities at 2.5%, or 2.5778% for entities using the Gregorian calendar year. This aligns with Islamic principles of wealth redistribution and carries strict compliance obligations. 8️⃣ Special Incentives:  - Investment in Less Developed Regions: A 10-year tax incentive is available for investments in provinces like Abha, Hail, and Jizan. Businesses also receive credits for employing and training Saudi nationals. - Special Economic Zones: Saudi Arabia has introduced five zones offering unique tax and regulatory benefits, enhancing opportunities for targeted industries. #SaudiArabia #CorporateTax #VAT #Zakat #Compliance #BusinessStrategy #ASCConsulting #TaxPlanning #Investment #Finance #TaxLaw #FinancialAdvisory

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Saudi Arabia and the challenges of BEPS Pillar Two adoption In 2021, the Organisation for Economic Cooperation and Development (OECD) Inclusive Framework (IF) issued a ‘Statement’ focused on addressing the key challenges of base erosion and profit shifting (BEPS) arising from the digitalisation of the global economy. The Statement proposed a Two-Pillar Solution, comprised of (i) Pillar One which aims to ensure a fairer distribution of taxing rights is established with respect to the profits of large multinational enterprises (MNEs), and (ii) Pillar Two which implements a new global minimum Effective Tax Rate (ETR) of 15% for certain MNEs. Pillar One provides for MNEs to be subject to tax in countries where they sell their products or services (often referred to as market countries). Amount A of Pillar One would apply to MNEs with more than €20 billion in consolidated group revenues and an overall profit margin above 10%. It is envisaged that 25% of the profits above a 10% margin may be taxed in the market economies. Pillar Two introduces a global minimum tax system. The threshold for this system to apply is lower than for Pillar One, namely consolidated group revenues of more than €750 million in line with the threshold for country-by-country (CbC) reporting. While Pillar One rules continue to evolve, the rules and guidance related to Pillar Two adoption have been issued and expected to take effect in 2024. For now, it may be useful to understand the mechanism for collection of additional taxes. It is envisaged that this will work via a series of rules which somehow ensure that taxpayers pay a minimum rate of tax of 15% on their global income, no matter the jurisdiction in which the income is earned. If the effective tax rate for a jurisdiction is below the 15% minimum rate, a top-up tax may be imposed and collected under one of the three following interlocking rules aimed at reducing profit shifting and base erosion: - Income inclusion rule (IIR): Imposes a top-up tax at the parent-entity level that effectively allows countries to "top up" the tax on earnings of foreign subsidiaries with effective tax rates below 15%. - Qualified domestic minimum top-up tax (QDMTT): Is a domestic "top-up" tax that will take precedence over either an IIR or UTPR and tax domestic entities up to 15% before another country's UTPR or IIR applies. - Undertaxed profit rule (UTPR): Will generally deny deductions with respect to members of a group or otherwise impose mechanisms that will impose additional tax on income subject to an effective tax rate below 15% that is not otherwise subject to an IIR or QDMTT. Saudi Arabia as a member of the IF is expected to adopt Pillar Two rules. The implementation of Pillar Two has the potential to notably raise the effective tax rate for Saudi Arabia MNEs that meet the criteria for Pillar Two adoption. #beps #pillar2 #internationaltax #saudiarabia #zakat #oecd

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Update !!!!!!! The Federal Tax Authority has issued a comprehensive Corporate Tax Guide that covers Tax Return procedures, along with transfer pricing thresholds for disclosure in the TP disclosure form and thresholds for connected person disclosures. #UAETransferPricing #FTA #UAECorporateTax #CorporateTax

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Day two of the conference begins with very relevant topic. All audit firms are required to adhere to ISQM 1 standards to maintain high quality, achieve audit objectives and meet stakeholders expectations. #isqm1 #mgimena #mgiworld #auditingstandards #omanauditors #fsaoman #cmaoman

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Attending the FTA Workshop: Exploring Taxation for Freezone Entities: Today, I had the opportunity to dive deep into the General Principles of Taxation for corporations and businesses operating within Freezones. This insightful workshop, hosted by the Federal Tax Authority, shed light on the intricacies of tax regulations, compliance requirements, and the unique considerations for Freezone companies. As a Chartered Accountant, staying updated on such developments is essential to provide accurate guidance to clients and ensure smooth compliance in a rapidly evolving tax landscape. GSS Management Consultancy | Muhammad Kaleem Sajid | Gulzar Ahmad ACA | Athar Iqbal #FTAWorkshop #Taxation #Freezone #CorporateTax #Compliance #Accounting #ContinuousLearning

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𝐆𝐫𝐞𝐚𝐭 𝐍𝐞𝐰𝐬! We're pleased to share that the Federal Tax Authority (FTA) has waived off the AED 10,000 fine we initially faced due to a delay in our corporate tax registration. The delay was a result of technical issues on the FTA's side, and after presenting our case, the FTA acknowledged our grounds and resolved the matter in our favour. This experience underscores the importance of having a knowledgeable tax professional on your team. Navigating such challenges requires expertise, and in this era, relying on 𝐩𝐚𝐫𝐚𝐩𝐫𝐨𝐟𝐞𝐬𝐬𝐢𝐨𝐧𝐚𝐥𝐬 can be a costly risk to any company. Stay informed and always ensure you have the right expertise on board. #CorporateTax #TaxProfessionals #FTA #BusinessSuccess #TaxCompliance

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Corporation Tax in the GCC: A Quick Comparison As businesses expand across the Gulf Cooperation Council (GCC), understanding the varying corporate tax rates and regulations is crucial. Below is a summary of corporation tax across GCC countries, highlighting key differences that can impact strategic decision-making. Key Takeaways: UAE has introduced a 9% corporate tax, making it competitive while offering incentives in free zones. Saudi Arabia distinguishes between foreign and local shareholders, with a 20% tax for foreign entities and Zakat for locals. Qatar and Oman offer lower rates with exemptions in specific sectors, making them attractive for foreign investments. Bahrain remains tax-free for most businesses, except in the oil and gas sector. Understanding these differences is essential for companies operating or planning to expand in the GCC. Strategic tax planning can lead to significant savings and better alignment with regional regulations. Imran Muhammad Ramzan Transformational CFO | Financial Strategist | GCC Tax Specialist #Tax #GCC #CorporateTax #BusinessStrategy #Finance #UAE #SaudiArabia #Qatar #Oman #Kuwait #Bahrain

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Tax Times #5 – Spotlight on Saudi Arabian Tax and Zakat Issues: This edition presents a series of hypothetical case studies on current topics, with stimulating questions for consideration. 1. Dividend Distribution Dynamics: A wholly Saudi-owned enterprise (SA1) makes an investment in a UAE-based company (AE1), which in turn invests in another UAE entity (AE2). Subsequently, AE2 invests in a second Saudi company (SA2). Should dividends from SA2 be channeled not directly to AE2, but rather to the Saudi resident shareholders' of SA1 bank accounts, Would they be liable for withholding tax (WHT)? 2. Permanent Establishment Puzzle: A European consultancy (SP1) operates a branch in Saudi Arabia and has agreed to provide services to a Saudi entity. While the Saudi branch delivers part of these services, SP1's employees also perform work on-site in Saudi Arabia. Could the European company head office inadvertently establish a separate permanent establishment (PE) in Saudi Arabia, distinct from its existing branch? 3. Regional Headquarters Revenue Requirements: A US corporation establishes a regional headquarters (RHQ) in Riyadh as a branch of its UK subsidiary. This branch is tasked with offering 'strategic management decision support' among other services, as mandated by its RHQ license, to other Middle Eastern and GCC subsidiaries of the American company. Is the Riyadh RHQ branch required to earn a profit margin on the services it provides to the parent company? 4. Initial Public Offering Implications: A Saudi company, owned equally by Saudi and Dutch shareholders, opts for an initial public offering (IPO). In the process, it decides to raise additional capital. Neither the Saudi nor Dutch shareholders sell any shares; they only experience dilution due to the new capital introduced through the public offering. Does this scenario trigger a capital gains tax event in Saudi Arabia? 5. Software Sales and Withholding Tax: A German software firm offers 'shrink-wrapped' games and network security solutions in Saudi Arabia through a distributor, who in turn provides these under a licensing agreement, to end users in KSA. Are the payments from the Saudi distributor to the German company subject to withholding tax (WHT)? Additionally, what about the payments made by the end users in Saudi Arabia to the German company through an online payment platform? Happy to hear thoughts and responses to the above. Please feel free to make any assumptions to support your responses. I will arrange to provide personal feedback and my understanding on possible responses in a follow up publication after the Eid and Summer break! Khalid Feroze, FCA #tax #zakat #saudiarabia #withholdingtax #permanentestablisment #capitalgains #ipo #licensing #duediligence #regionalheadquartercompany #transferpricing #internationaltax

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The SECP’s ESG Disclosure Guidelines for listed companies in Pakistan aim to enhance transparency, improve corporate governance, and promote sustainable business practices. By requiring companies to report on their environmental, social, and governance impacts, the guidelines can potentially help attract foreign investment and foster ethical business conduct. Additionally, the focus on social responsibility can affect the company’s reputation and stakeholder relationships, specifically for export-based manufacturing companies, ultimately leading to a more responsible and transparent corporate sector in Pakistan. Please read the documnt below for more details.

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Who is liable or responsible for tax reporting and filing in Saudi Arabia? This week’s thought piece starts with an important area impacting stakeholders from a tax and zakat perspective in KSA i.e. managing risk and liability given the unique and complex nature of interplay between the basis on which corporate tax and zakat are determined. A few questions are then raised with regard to other taxes in KSA, giving room for thought and negotiation in certain cases. From a corporate income tax and zakat perspective, in addition to ensuring compliance with IFRS, a company in KSA as a legal entity is responsible and liable for the relevant tax or zakat as applicable. This situation may create some challenges where a joint venture between Saudi /GCC and non-Saudi/GCC shareholders are involved. Accordingly, proper accounting, clarification in relevant shareholder agreements ensures that any tax and zakat liabilities and reporting responsibilities are properly managed. What happens in the case of a 100% Saudi/GCC owned company subject to Zakat only or 100% non-Saudi/GCC owned entities subject to corporate income tax only, one would assume that full disclosure directly on the income statement should be fine? Moving on to a mixed company (50% Saudi and 50% Foreign/Non-Saudi) involving a split between tax and zakat. Will the disclosure of such liability directly on the income statement appear reasonable and in line with IFRS? Or should reflection as part of owner’s equity be a more accurate indication of the ultimate shareholder tax/zakat liability. Can a corporate tax equalization arrangement be enforceable? What happens in case of a Fund, Partnership or Consortium in KSA? Will submission of an information tax return suffice, or could tax filing and reporting obligation be imposed on managers, members or partners? The tax reporting and filing dilemma gets more interesting, where a change of shareholding, exit or sale? Who will be responsible for the reporting to the tax authorities and filing of a capital gains tax return, buyer or seller? The withholding tax conundrum. What if there a permanent establishment, is the paying entity still obliged to withhold tax. The KSA paying entity is responsible to report and settle amounts to tax authority within a specific time frame. Is there a risk of joint liability in case of non-compliance? What happens when paying entity and recipient agree to a gross up or net basis of tax clause? Is there a reporting requirement when a payment is not subject to WHT or in case where a tax treaty provides for relief? The commercial drivers and numerous tax and legal related challenges which may arise and create concerns, requires that any arrangements or agreements are carefully drafted to ensure that any potential primary or secondary tax liabilities, including delay fines and penalties are appropriately addressed in KSA.

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