Gulf States Finalizing Plans For VAT From 2018

by Lorys Charalambous, Tax-News.com, Cyprus

19 January 2016

The UAE Deputy Ministry of Finance, Younis Al-Khouri, has told reporters that Gulf Cooperation Council countries are nearing an agreement that would see value-added tax introduced in each of the members of the bloc by 2018.

A pan-GCC VAT – receipts from which would offset the loss of customs revenues arising out of the removal of internal customs duties – has been discussed for many years. Previously, there were said to be many technical obstacles to overcome, and some member states were said to be more ready to implement the regime than others. By May 2015, however, officials from GCC member states had signed a draft agreement on VAT.

Al-Khouri has now told local media that GCC states should now be ready to implement the regime from 2018, on the sidelines of a meeting of Gulf finance ministry representatives. Each of the states will initially have their own VAT legislation but a single, unified law may be discussed later.

The tax will be levied broadly at a single-figure rate – likely to be five percent – and healthcare and education services are expected to be exempt.

The GCC countries are: Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman.

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