Based on the authority vested in me according to the provisions of Article (50) and in pursuance of the provisions of Article (26) of the General Sales Tax Law No. (6) for the year 1994, as amended, the following Instructions are to be followed:

 

First:     Collection of Tax:

a)     Tax on imported goods shall be paid prior to their release pursuant to the provisions of the Customs Law.

 

b)     The Registered Person shall be required to charge tax on the supply of taxable goods or services.

 

a)               1.   The General and Special Tax become due on the supply of goods when any of

                         the following events is realized first:

a-      Delivery of goods. However, the Director may approve the date of the tax invoice to be the tax point in case where such invoice is issued periodically or at the end of a certain period set after the date of delivery.

b-      Issue of a tax invoice.

c-      Receive the payment for the supplied goods, in whole or in part.

 

2.   The General tax become due on the supply of service when any of the following two events is realized first:

a-      Issue of a tax invoice.

b-      Receive the payment for the supplied service, in whole or in part.

3.    In any of the cases provided for under sub-paragraphs (1/b, c) and (2) above, tax shall become due by reference to the value of the tax invoice or the payment made, which ever is higher, for the supplied goods or service

 

d) The general tax on the imported service shall be paid upon the full or part payment of the consideration for this service.

 

e)          1.  The tax on the goods which is placed on sale shall be paid when a final supply   is made by the Registered Person.

2. Notwithstanding the delivery of goods by the Registered Person to another Person under the status of Goods On Sale, such delivery shall not be considered a supply until the Person who possess these goods has actually supplied them. Tax thereon shall be paid at the time of such supply.

 

f)     The tax on goods which are associated with or involving financial services shall be payable by reference to the value of goods prior to being associated with the exempted financial services.

 

g)         1.    The general tax shall be payable on goods or services exempted or zero-rated under Schedules (2) and (3) if supplied in combination with (as integral part of) other goods or service subject to the general tax.

2. Goods and services shall be regarded as an integral part of each other (combined) if the supplier makes a condition that neither can be supplied independently of the other.

3.    a-  If the supplied goods consists of two items, one is exempted or zero-rated and the other is subject to tax, the dominant character shall be taken as the reference to identify the nomenclature of goods for the purposes of subjecting the supply of goods to tax, provided that the higher value or the dominant usage be taken into consideration to determine tax liability.

b- Mixed items and processed items which consist of various materials that are produced by assembling different materials, as well as the goods put up as sets for retail supply shall be classified by reference to the item which gives them the dominant character.

 

Second:     Payment or remittance of tax:

a) The Registered Person shall be required to pay the balance of the due tax according to his tax return, submitted to the Department, within one month following the tax period prescribed by virtue of the registration letter issued by the Department.

 

b)     Subject to the amounts paid to Customs Department in relation to the imported services upon the Customs release of the instrument by which the service was imported, the importer of a taxable service shall be required to pay the amount of tax, or the underdeclared amount, to the Department in any of the following cases, which ever comes first:

 

1.   Within one month from the date of paying the consideration of the imported service or any part thereof within the extent pertaining to such a part.

2.   Upon the Customs release of the material through which such service was supplied.

3.   Within six months from the date of receiving the service or any part thereof within the limits that relate to such a part.

 

c) Subject to the provisions of paragraph (d) of Article (26) of this law, the importer of the goods shall be required to pay the due tax pursuant to the procedures adopted for the payment of the customs duties. The release of such goods shall not be effected until the payment of the due tax has been fully made.

 

d)     The person who disposed of any of the goods which are exempted from the payment of tax or used them within the five years following the date of exemption in a way other than that for which it was exempted shall be required to pay the tax payable thereon to the Department by reference to the value of the goods and the tax rate in effect at the time of disposal or use.

 

Third:     Deferment of Tax:

                  1.      The Director may postpone the payment of the tax due on the local goods and services for a period of one month subject to compliance with the following:

a- The Registered Person shall be complying with the submission of his tax returns within the legal grace periods fixed thereto and he shall not have committed any of the civil or criminal tax fraud acts within the twelfth month preceding the date of applying for a deferred payment approval .

b- The request for a deferred payment shall be made in writing, showing the reasons for such deferment.

c- The tax to be postponed shall be a tax payable on goods subject to the General Tax. 

 

2. The Director may postpone the payment of the tax due on importers of goods or services subject to compliance with the following:

a-      Importer should make a written request to the Department for this purpose.

b-      The importer should have been registered for sales tax and compliant with the provisions of the Law for a minimum period of one year.

c- He shall be complying with the submission of tax returns for the prescribed tax periods within the due time.

d- He should not have committed any of the criminal offenses provided for under the General Sales Tax Law No. (6) of 1994, as amended, and the Customs Law in force, within the twelve months preceding the date of applying for a deferred payment.

e- The imported goods or services should not be used for the purposes of exercising a none taxable or exempted  activity.

f- The tax requested to be postponed should not be a Special Tax.   

 

Fourth:  Instructions No. (3) for the year 2001 concerning the rules and proceedings of the payment of tax shall be

             hereby repealed.

 

Fifth:     These Instructions shall be put into operation as of the date of publication in the Official Gazette.

 

Minister of Finance