Arab Gulf VAT live today

Mon 1st Jan 2018

Saudi Arabia and the United Arab Emirates (UAE) have today become the two latest states to impose Value Added Tax on their consumers.  From midnight, 5% VAT became due on most transactions, including between companies (but with the right to reclaim).

GCC 6 states and VAT

In 2016, the six members of the Gulf Cooperation Council signed the VAT Agreement, committing them to each launch a 5% VAT regime, including a single union area with harmonised tax principles and simplifications on intra-state trade.

The current status by nation is as follows:

  • Saudi Arabia – launches today a relatively easy-to-follow regime with few exemptions. Existing taxes means businesses has at least some basic experience of taxation. The implementing law and supporting compliance guidance were made public over the summer, and have given businesses some time to prepare. Almost 100,000 businesses are now VAT registered with the GAZT.
  • UAE – implements VAT today, albeit it a narrower base than Saudi Arabia with more zero rating and exemptions around financial services, real estate and public transport. The FTA has been much slower to issue the legal and supporting documentation, with compliance regulations only appearing in December. The Federal Tax Authority has been much less proactive on educating businesses.
  • Bahrain – expected to launch its VAT regime around July 2018.
  • Oman – declared recently that it will not implement VAT until at least January 2019 despite facing further credit rating cuts with a large deficit.
  • Kuwait – 2019 is most likely the earliest implementation date with a slower moving political decision-making and parliamentary process.
  • Qatar – is vague on its implementation plans, and indicated unofficially Quarter 2, 2018. But it faces regional political uncertainty following sanctions from some GCC states and Egypt.

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