With the rapid development of foreign trade industry, we do more and more markets. As a potential stock, the Middle East market, especially the United Arab Emirates and Saudi Arabia, has an average e-commerce penetration rate of 75%, and the average price of a customer is even higher than that of the United States and the United Kingdom, with an average price of more than $150. In addition, Chinese products are welcomed by the rich, so the Middle East market contains huge business opportunities, and many sellers have begun to set up shop in the Middle East.
Among all the countries, the Middle East has the most strict tax requirements and fines, so the sellers attach great importance to registering the Middle East VAT in time. However, you may not think that if you do not continue to operate the market/e-commerce platform in this country, the tax number registered before will not be processed, the penalty will be quite severe.
Let's start with the UAE
Uae: Under what circumstances should a tax ID be cancelled
According to Section 6 of Act 9 of the Federal Tax Code (the latest version of November 2021), a tax registrant who meets the following conditions shall apply to the Tax Bureau for cancellation of the tax number within 20 working days (the time limit is important).
Discontinue supply and expect no taxable supply for the next 12 months;
A local enterprise has supplied less than the voluntary registration threshold (AED187500) in the past 12 months and the Inland Revenue Authority acknowledges that it is not expected to exceed the voluntary registration threshold in the next 30 days according to the Ordinance.
Uae: Cancellation of fines and cancellation conditions
Taxpayers who fail to file an application for cancellation within 20 working days of stopping the sale of the supply of taxable products, or fail to file a final return and pay the tax payable within 28 days of the registration application being submitted to the "pre-approved" status of the Tax Bureau, will incur a penalty of Dh1,000, rolling over each month up to Dh10,000.
Therefore, if the seller needs to cancel the UAE tax ID, it is better to submit the cancellation within 20 working days of the last sale and avoid submitting zero declaration before the cancellation.
In real cases, we have met customers who have not sold at all and used to declare 0, which resulted in a penalty of 10,000 dirhams on cancellation.
In addition, it is not possible to cancel the UAE tax code under the following circumstances:
1. If there are taxes or fines that have not yet been paid, an application for cancellation of the tax number shall be submitted after the payment of the tax payable and the administrative penalty fine;
2. If the final tax return is submitted and the tax payable is paid within 28 days of the "Pre-Approved" of the tax Bureau, the administrative penalty will still be incurred if it is overdue.
3. Uae local enterprise sellers who voluntarily register their tax number (not compulsory registration), whose tax number registration time is less than 12 months, shall not apply for cancellation of tax number. In addition, non-local enterprise taxable sellers, belong to the compulsory registration, not subject to this restriction.
Also in the Middle East, in contrast, Saudi Arabia's cancellation fine is relatively friendly, because Saudi Arabia's fine does not specify how to cancel the fine, in the actual cancellation case, Xiaobian has not encountered temporarily.
Saudi: Under what circumstances should the tax code be cancelled
According to the latest Saudi VAT regulations (November 2021 version), companies should apply to the Saudi Tax Authority for cancellation of their tax number within 30 days under the following three conditions:
1. When the company ceases to carry out economic activities, including the company's cancellation and other corporate entities do not exist;
2. A non-local Saudi enterprise that ceases taxable sales in Saudi Arabia and expects to have no taxable sales in the following 12 months;
3. If the annual taxable sales of local Saudi enterprises are lower than the annual VAT registration threshold (375,000 Riyals), they can apply for VAT cancellation of registration.
Saudi Arabia: Cancellation of fines and cancellation conditions
The Saudi Tax Authority has not made clear the relevant penalty for the time being. However, if the tax number is not declared in time during the declaration period, there will be a penalty for late declaration and late payment of tax.
Do not cancel the tax number do not pay a fine, what impact will it have on the company and legal person?
China has signed bilateral trade agreements with many countries in the world. Although there are not many substantive cases on the impact of cross-border e-commerce enterprises and legal persons at the present stage, there are still cross-border fines and international reputation risks of legal persons/companies.
Generally speaking, the cancellation of the tax number is a rigorous process, which requires constant communication with the tax bureau, cooperation to provide any information required by the tax bureau, and timely feedback to the requirements of the tax bureau. In reality, the cancellation is more complicated than the registration process.
At present, the VAT market provides uneven services for sellers. Sellers must sharpen their eyes and find professional and qualified service providers when choosing VAT service providers.