Gulf states review VAT implementation on oil price drop
The six states of the Gulf Cooperation Council agreed on 9 May 2015 to expand their review of the proposed introduction of a Value Added Tax. Currently there is no sales tax in the region, but the impact of the falling taxes with the drop in the price of oil from over $100 to around $65 is forcing the state finance ministries to think again.
Gulf Cooperation Council reviews VAT
The discussions around VAT were held this weekend by the Gulf Cooperation Council’s Financial and Economic subcommittee which coordinates shared fiscal, monetary and trade issues with affect the region.
The region has been considering a VAT system since 2007 to help alleviate the reliance on taxes from oil – which accounts for some 90% of the country’s revenues. This has left the states vulnerable to exactly the type of shock fall in oil prices that has taken place in 2015. This has pushed VAT back to the top of the table. Any proposal to introduce the consumption tax would probably have to be simultaneously agreed to ensure there was no disruption to the large volume of cross-state trade that takes place.
The UAE states include: Saudi Arabia; Kuwait; Qatar; UAE; Oman; and Bahrain.