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United Arab Emirates, Saudi Arabia Introduce Value-Added Tax

by Lorys Charalambous,, Cyprus

01 January 2018

Having introduced value-added tax on January 1, 2018, the United Arab Emirates and Saudi Arabia became the first two states of the six-member Gulf Cooperation Council grouping to follow through on the bloc's commitment to introduce a harmonized value-added tax.

In the UAE, the VAT must now be administered by businesses whose taxable supplies exceeded the mandatory registration threshold of AED375,000 (USD102,000) in the past twelve months. Businesses that were not yet required to register but whose supplies will exceed this threshold within a period of 30 days must register.

Taxpayers are allowed to register voluntarily if the total value of their taxable supplies exceeded AED187,500 in the past twelve months, or if the business expects its turnover to exceed that threshold within the next 30 days.

The mandatory registration threshold is SAR1m (USD266,667) in Saudi Arabia. The deadline for registration expired on December 20, 2017.

Although GCC member states are afforded some flexibility on what goods and services may be subject to zero rated or exempt treatment, both regimes feature a five percent headline rate and concessionary treatment, in line with international norms, for certain transport, financial services, real estate, education, and healthcare goods and services.

Guidance on the particulars of the respective regimes has been released by Saudi Arabia's General Authority of Zakat and Tax (GAZT) and the UAE's Federal Tax Authority.

The other GCC states are Kuwait, Bahrain, Oman, and Qatar. Although they committed at GCC level to introduce VAT, none of the remaining states has announced a timeline for introducing the levy.

TAGS: United Arab Emirates | tax | business | value added tax (VAT) | Kuwait | Saudi Arabia | financial services | Bahrain | Qatar | education | Gulf Cooperation Council | Oman | services | Tax

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