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VAT in Gulf Co-operation Council (GCC)

Representatives of the GCC have recently signed a VAT Framework Treaty confirming the introduction of a formal VAT system in the six GCC Member States; Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.  

Whilst there is currently no certainty on an implementation date it is likely to be early 2018 in at least some Member States.

The VAT framework treaty provides that VAT will be charged at 5% initially but there is also scope for zero-rates and exemptions.  This means that, similar to the European VAT system, there will be flexibility on the application of VAT in each Member State and there is likely to be an impact on sectors where the VAT exemption may apply, including

  • Education
  • Healthcare
  • Financial Services

Complications are also likely to arise in sectors involving zero-rated services or electronic services such as:

  • Construction Industry
  • Transport
  • Technology and telecommunications

Businesses should also be aware that VAT has implications where there are charges between related businesses that may not currently be recognised in the business accounts and where there is cross border trade between such companies, where money may not change hands but goods are moved.

CVC is well placed to advise on the implementation of VAT in any of the GCC countries due to its knowledge and experience in the EU VAT system and its working arrangements in the GCC. We are aware of the potential pitfalls and also how businesses can be structured to gain the most advantageous VAT result. In the GCC countries, where tax has not been an issue in the past, businesses may find that their accounting systems must be radically modified to deal with the introduction of VAT. Time has to be allowed to effect any changes before the tax is introduced so the business is ready to be compliant from the date VAT is introduced.

The services we can provide include:

  • Initial training on implementing VAT in your business
  • Ongoing support and assistance in submitting returns
  • Systems reviews
  • VAT planning

Additionally we will be producing regular newsletters as information becomes available and you can subscribe to these by emailing info@gccvatadvice.com