Middle East Economic Government measures in response to COVID-19

Israël

General Information

Israel has announced a raft of measures across all areas, including extending tax deadlines, freezing enforcement actions, creating a special loan facility for SMEs and
increasing flexibility in the employment market, amongst other measures.
The Israeli government on 27 March 2020 published Temporary Regulations #8432 to provide tax-relief measures related to the coronavirus (COVID-19) pandemic.

Tax measures — Direct and Indirect

The regulations provide extensions of time for certain tax-related deadlines. Specifically, the period 22 March 2020–31 May 2020 is not considered to be “calendar days” for purposes of determining tax-related deadlines and certain terms established under the Israeli tax laws. In particular, the regulations extend the:
— Concerning dates provided by the income tax law:
— Deadlines for the tax authorities to answer a taxpayer request for an advance pricing agreement
— Deadlines for distribution of stock options to employees after approval
— Deadlines for submission of notification of certain qualified tax-neutral reorganizations
— Certain deadlines for collection of tax debts
— Deadlines for auditing tax returns
— Deadlines for taxpayers to appeal the tax authorities decisions
— Concerning dates provided by the value added tax (VAT) law:
— Deadlines for auditing tax returns
— Deadlines for taxpayers to appeal certain types of tax authorities’ decisions
— Concerning dates in the real estate tax law:
— Deadlines for issuance of a written decision by the tax authorities
— Deadlines for various notifications that need to be submitted to the tax authorities — in particular, notifications of selling an apartment
— Deadlines for the tax authorities to confirm or contest the value used in a transaction and for the taxpayer to appeal this determination
— Concerning dates in the law for encouraging investments:
— Deadlines for applying for the “election year” for start of the benefits
— Deadlines for applying for advance approvals
The regulations also address deadlines in other “minor” or grandfathered tax laws. Regarding other tax-related measures, the regulations extend the:
— Deadline for filing annual corporate income tax reports — the due date of 31 May is postponed to 31 July 2020 (further extensions are available upon request), and the same deadlines apply
for individual income tax reports submitted electronically.
— Deadline for filing paper individual income tax reports — the due date of 30 April is postponed to 30 June 2020 (further extensions are available upon request).
— Deadline for monthly VAT reporting and payment — the due date of 16 March is postponed to 26 March 2020.
— Deadline for bi-monthly VAT reporting and payment — the due date was postponed from 15 April to 27 April 2020.
— Deadline for renewing annual withholding tax certificates — the due date is postponed from 31 March to 30 April 2020.

The VAT authorities will allow an input VAT deduction to be claimed with the submission of a scanned copy of a tax invoice issued in the period between 1 March 2020 and 31 May 2020 (normally a signed paper original or a digital copy with electronic signature is required).
Entrepreneurs affected by the COVID-19 situation may apply for decrease of social security advance payments. For self-employed individuals, the deadline for the March 2020 social security payments is postponed from 15 April 2020 to 15 May 2020.

Economic stimulus measures

— On 8 March, the Finance Ministry opened a special loan facility for struggling companies to receive support from the State Guarantee Fund for Small Businesses. The facility is primarily aimed at SMEs. It provides working capital loans of up to 5 years to a maximum of NIS 500 000 or up to 8% of the company’s last annual turnover, with options to defer payment for half a year. Banks are expected to provide credit approval within nine working days.
— On 11 March, the Government announced a further NIS 10 billion support package, doubling the amount available under the loan fund.
— On 16 March, the government announced further measures of importance to SMEs, which include (alongside measures to enhance access to loans already announced):
— Advance of payments to small and medium government suppliers;
— Postponement of self-employed, small and medium business mandatory payments;
Furthermore, a number of other policy measures are currently in place:
— Reducing the level of collateral for businesses (while increasing government guarantees at the same time) in the Small and Medium Business Fund from 25% to only 10% for any business that submits a signed statement regarding damages from the Coronavirus. The fund’s credit line will be increased to four billion NIS.
— A support package of 10 billion NIS to SMEs, mostly through the State guarantee Fund to SMEs, to finance working capital in view of cash flow difficulties:
— State guarantees increased to 85% of the loan amount
— Reduced collateral up to 10%
— Longer repayment period up to 5 years
— Shortened loan approval at the bank – up to 9 working days
— Loan up to 500 000 NIS or 8% of the company’s annual revenue (the highest between the two)
— Israel’s five largest banks, which account for about 99% of overall banking activity, declared a deferment of mortgage and loan payments (with a waiver of deferred payment fees) for the next three months. Israel’s largest mortgage bank, bank Mizrahi Tefahot, will postpone payments for four months.
— The same applies for state-funded mortgages.
— As directed by the Accountant General of the Ministry of Finance, the government pays its suppliers within a few days, while the maximum amount of time to refund businesses was reduced from 45 to 30 days.
— Promoting local procurement: encouraging residents to buy from local SMEs by local authorities, through investments in marketing within the community.

Oman

General Information

The rapid spread of the novel coronavirus (Covid-19), which has been declared a pandemic by the World Health Organization, is adversely affecting economies and businesses around the world. Governments are announcing relief measures to mitigate its economic impact and help individuals and businesses navigate these unprecedented times.

Tax measures — Direct and Indirect

Tax relief measures
The following corporate tax relief measures were announced by the government on 31 March 2020:
— Deferral of tax return filing and payment of tax by up to three months from the due date
— Exemption from all fines and penalties related to such deferred filing and tax payments
— Tax deductions for all donations or contributions made toward handling the COVID-19 pandemic, in accordance with the prescribed rules under the income tax law and the executive regulations
— Other measures include flexible tax payment mechanisms; extension of timelines for filing objections against tax assessments; and additional time to submit supporting documents and clarifications for ongoing objection proceedings. Refer to our Tax flash for further details. In addition to above, other tax measures announced by the government included:
— Exemption from tourist and municipality tax (applicable at 4%) for restaurants until 31 August 2020
— Exemption from municipality tax (applicable at 5%) for commercial establishments until 31 August 2020.

Economic stimulus measures

On 18 March 2020, the Central Bank of Oman (CBO) announced a comprehensive incentive package to inject additional liquidity of more than OMR 8 billion (USD 20.78 billion) into the economy.
Key measures announced as part of the package include:
— Lower capital conservation buffers by 50%, from 2.5% to 1.25%
— Increase the lending ratio/financing ratio by 5%, from 87.5% to 92.5%, on the condition that this additional scope be reserved for lending to productive sectors of the economy, including the healthcare sector
— Accept requests for deferment of loans/interest (profit for Islamic financial institutions) for affected borrowers, particularly SMEs, with immediate effect for the coming six months without adversely impacting the risk classification of such loans
— Defer the risk classification of loans pertaining to government projects for a period of six months
— Local banks to consider reducing existing fees for various banking services and avoid introducing new fees in 2020
— Reduce the interest rate on repo operations by 75 basis points, to 0.50%, and increase the tenor of repo operations up to a maximum of three months
— Decrease interest rate on discounting of government treasury bills by 100 basis points, to 1.00%
— Reduce the interest rate on foreign currency swap operations by 50 basis points and increase in the tenor of swap facility up to a maximum period of six months

— Lower the interest rate on rediscounting of a bill of exchange and promissory note (with two signatures) by 100 basis points, to 3%
— Decrease the interest rate on rediscounting of a promissory note with acceptable guarantee by 100 basis points, to 3.25%
— Reduce the interest rate on rediscounting of a promissory note accompanied by trust receipt by 125 basis points, to 3.50%.
In addition to the above, on 23 March 2020, the CBO announced additional measures urging banks to identify the ‘most critical functions’, which need to be carried out without disruption, and provide suitable staff (and backup), both at the premises and working from home. These functions, at a minimum, should include:
— Electronic/digital payments
— Trade transactions
— Online services
— Treasury operations
— International payments/remittances
— Emergency loans
— Processing of salary payments
— Government transactions
— Cheque processing
— Call centers
— ATM/CDM services
— Fraud/cyber risk monitoring services
— Remittance services provided by local banks should be at minimum cost in view of the closure of money exchanges, as per the directives of the Supreme Committee
— Banks to waive charges levied on point of sale (POS) transactions
— Use of old cards to be enabled under prompt notification to customers wherever debit/credit cards could not be renewed, or renewed cards could not be delivered to customers
— Separately, the CBO has further extended the deadline for the completion and submission of audited financial statements/net worth statements for borrowers to 30 June 2020

Other measures and sources

Customs-related measures
— The Omani customs authority has announced that where the importer is unable to obtain or produce the necessary authorizations (i.e., documents and certificates of the goods from the exporting country), the relevant goods will still be cleared.
— Further, the current requirement to obtain a guarantee for the non-submission of original legalized documentation has been waived until further notice.
Other relief measures
— Postpone loan instalments/premiums for small and medium establishments, i.e. fees payable to Al Raffd Fund, for the next six months
— Defer loan instalments/premiums payable to Oman Development Bank during the next six months
— Grant rent exemption to factories in industrial cities for a period of three months
— Exempt companies from Commercial Register renewal fees for the next three months
— Car (automobile) sale agencies and finance companies to postpone instalments/premiums of cars for a period of three months.

Qatar

General Information

Qatar has focused on taking tax measures and developing infrastructure to enable people to better work and/or study remotely.
They are also focusing on developing infrastructure to minimize the spread of the coronavirus and are prepared to accommodate at least 18,000 people in a quarantine compound, if needed.
Qatar government announced yesterday its partnership with Microsoft to implement modern workplace solutions such as Microsoft Teams to enhance productivity by empowering its workforce to work remotely. The move will foster communication and collaboration amongst government entities to ensure uninterrupted delivery of services
to businesses and citizens.

Tax measures — Direct and Indirect

— The General Authority of Customs in addressing the effects of the coronavirus (COVID-19) pandemic has issued a directive exempting food and medical equipment from customs duties for a period of six months, effective from 23 March 2020. The exemption from customs duty applies for 905 different items listed in the customs clearance system. These included basic food items and a number of medical devices.
— The General Tax Authority of Qatar issued guidance providing a two-month extension of the due date for filing tax returns for the year ending 31 December 2019.

Economic stimulus measures

— Leading Telecom companies like Ooredoo and Vodafone have contributed to the Government’s effort to ensure the safety of people by improving the capacity of the existing infrastructure to ensure everyone is better connected while working from home, focusing on doubling the internet speed without any extra charges.
— MoEHE has announced the use of Microsoft Teams and Learning Management System (LMS) applications to enable schools and education institutions to interact with students and parents and deliver digital content to ensure a smooth educational process during these times of crisis
— Upon the directives of Amir H H Sheikh Tamim bin Hamad Al Thani, to support the economic and financial sector within the framework of the precautionary measures to combat the spread of the COVID-19) and H H the Amir’s directives to support and provide financial and economic incentives, amounting to QR75bn for the private sector, Prime Minister and Minister of Interior H E Sheikh Khalid bin Khalifa bin Abdulaziz Al Thani, directed to allocate guarantees to local banks at an amount of QR3bn.
— Qatar Finance and Business Academy (QFBA) launched an initiative called « Azm » to empower businesses in times of crisis, aiming at training and assisting talented and promising entrepreneurs from the Qatari community to reduce the key strategic risks associated with the coronavirus on the financial sector, and facilitating the adoption of the best risk management practices by companies, during the current global crisis.
— Governor of Qatar Central Bank (QCB), H E Sheikh Abdullah bin Saoud Al Thani has launched the “Qatar Mobile Payment System” (QMP), which provides a new and safe method for immediate electronic payment, after completing the infrastructure and all the requirements of the central system for electronic payment at the State level, according to international best practices in the field of mobile payment services.

— Minister of Public Health H E Dr. Hanan Mohamed Al Kuwari and Minister of Municipality and Environment H E Abdulla bin Abdulaziz bin Turki Al Subaie inspected the newly established Umm Slal quarantine compound as part of the precautionary and preventive measures taken by the government against COVID-19. Umm Salal quarantine compound is composed of 32 buildings with capacity for 18,000 beds and will be available once the compound is fully equipped in the next few weeks.
— Sidra Medicine has introduced drive-through collection for dispensing medications at the outpatient building. Patients have to call on 40030030 and confirm their time slot for the collection.
— In addition to traditional hotlines, government entities in Qatar have intensified the use of social media platforms to inform and raise the awareness of both citizens and residents about the measures taken and instructions given to control the spread of the virus within the State. Efforts are also taken to limit the spread of misinformation on these social platforms.
— Companies in Qatar started communication campaigns through apps, social media and text messaging to urge their customers to use mobile services and avoid being exposed to infection. Such services include e-Government services via the Metrash application, mobile banking operations through banking applications and web portals, telecommunication services for credit top-ups and contract management, or catering and grocery services via order management and delivery platform.

Ministry of Public Health (MoPH) has published new guidelines on the working hours in the Medical Commission Department, starting from next Sunday (March 29).

Saudi Arabia

General Information

The Saudi Arabian Monetary Authority unveiled a $13.3 billion package on March 15. The “Supporting Finance for the Private Sector” program will support SMEs through three components, including $8 billion to support banks defer SME payments, $3.5 billion for concessional financing and $1.6 billion to support loan making to small businesses. There are also numerous tax related measures, including extending deadlines for filing tax returns and paying those taxes. Public sector workers will continue to receive salaries, but there is no further information on private sector workers yet.

Tax measures — Direct and Indirect

— Measures announced to provide relief for taxpayers include easing tax return filing and tax payment requirements for a limited time in response to the coronavirus (COVID-19) pandemic.
— The General Authority for Zakat and Tax (GAZT) introduced a general extension of three months for filing tax returns and payment of the related taxes for registered taxpayers. The extensions apply for Zakat, income tax, withholding tax, value added tax (VAT), and excise tax due for the period from 18 March to 30 June 2020 as follows:
— Tax/Zakat: Return filing dates will be postponed until 31 July for taxpayers with a December year-end, certificates will be issued without restrictions for the year 2019
— VAT: Return filing dates for VAT will be postponed until 30 June, 31 July, 31 August, 30 September for the February, March, April, and May periods.
— Excise tax: Payments due on goods imported during the postponement period can be delayed, but the importer must submit monthly temporary returns to GAZT.
— Withholding tax: Filing dates for submission of returns are now due on the 10th of July, August, and September for the March, April and May periods.
— Delay penalties: Taxpayers are exempted from late (delay) penalties for the submission of returns and the associated payments for all taxes (listed above) that fall due within the period starting from 18 March to 30 June 2020.
— Payments suspended: Penalties will not apply for payments of tax that are suspended.
— Refund payments: Refunds due to taxpayers are to be expedited.

Economic stimulus measures

— On 14 March, Saudi Arabia announced a stimulus package, including SAR 50 billion (USD 13.3 billion) for SMEs. Under Saudi Arabia’s programme, SAR 30 billion will be allocated for banks and financing companies to delay loan payments due from SMEs for six months. The package will provide SAR 13.2 billion to SMEs through bank loans to help them to continue operations and support growth. SMEs will also get relief from finance costs through a SAR 6 billion loan guarantee programme.
Monetary Policy:
— The Saudi Arabian Monetary Authority unveiled a $13.3 billion package on March 15. The “Supporting Finance for the Private Sector” program will support SMEs through three components:
$8 billion to support banks in deferring SME payments for six-months; $3.5 billion to provide concessional financing; $1.6 billion in guarantee provision to support loan-making to small businesses. The final component of the program will support the e-commerce sector, with the provision of a $213 million fund to cover payment fees. A new economic committee has been set up to coordinate and review the programs and incentives put in place by the National development fund, Kafala Program, General Authority for Small and Medium Enterprises, and Saudi Import Export Bank.
— There are monetary incentives to ease financing targeted at SMEs, but no fiscal incentives announced yet in terms of tax delays. Focus is on keeping businesses shut for next 14 days.

Fiscal Policy:
— It will also enable employers to refund fees of unused work visas.
— Public sector workers will continue to receive salaries; no other specific policy discussed for private sector workers who have been ordered home for 15 days starting 19 March

United Arab Emirates

General Information

The United Arab Emirates has implemented a travel ban on non-Emiratis residents, reduced customs fees and municipality fees, cut interest rates and is rolling out a $27 billion stimulus package to attempt to reduce the impact of the coronavirus on the economy.

Tax measures — Direct and Indirect

Dubai

The Dubai government on 12 March 2020 announced an economic stimulus package to enhance liquidity in response to the COVID-19 outbreak. Included in the package are the following
measures:
— A refund of 20% of the customs fee imposed on imported products sold in Dubai;
— A 90% reduction of fees imposed on submission of customs documents;
— A “freeze” on the 2.5% market fees levied on all facilities operating in Dubai;
— Reduction of “municipality fees” imposed on sales at hotels from 7% to 3.5%;
— A freeze on “fees” charged for the sale of tickets, issuance of permits and other government fees related to entertainment and business events;
— A reduction in water and electricity bills by 10% and a reduction in deposits paid for water and electricity connections by 10%;
— Changes to bank guarantees or cash requirement rules.

Abu Dhabi

Abu Dhabi has also announced initiatives focused on supporting small and medium-size enterprises (SMEs) and easing the availability of loans to local companies and include:
— Suspension of real estate registration fees until the end of 2020;
— Reduction of industrial land leasing fees by 25% on new contracts;
— Suspension of tourism and municipality fees for the tourism and entertainment sectors until the end of this year;
— Exemption for commercial vehicles from annual registration fees until the end of this year;
— Exemption for all vehicles from road toll tariffs until the end of this year.

Economic stimulus measures

— The UAE Central Bank cut interest rates to 0.75% but kept repurchasing rates.
— The UAE Central Bank is rolling out a stimulus package of $27bn, and Dubai also added its own stimulus package of $409 million.
— Temporary exemptions on principle payments and interest on loans have been approved for the private sector affected by Covid-19. Efforts are being made to create a banking environment that is more friendly to investors, including first-time property buyers, and boost lending capacity. There are numerous exemptions, waivers and rebates to help stabilize the above mentioned sectors, plus encourage further investments.

— The Dubai Government has announced the following measures:
— Reduction of municipality fees imposed on sales at hotels from 7% to 3.5%
— The Abu Dhabi Government has also announced the suspension of tourism and municipality fees for the tourism and entertainment sectors until the end of this year

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