Gulf states 2020 VAT implementation
The six Gulf states which make up the Gulf Cooperation Committee (GCC) have made new advances on the proposed VAT regime for the region. This includes a potential launch date of 2020.
The introduction of VAT across the GCC has been pushed back onto the agenda with the halving of global oil prices in the past twelve months to below $50 per barrel. This has left the region with sharp declines in revenues which are overly dependent on oil duties. Most of the region has now been pushed into deficit, which has resulted in heavy cuts to subsidized services.
Agreements on zero rating VAT
At a meeting last week, finance ministers from the GCC agreed on zero VAT rating for a range of services, including: education; healthcare, basic foodstuffs and social services. There has been no agreement on the VAT on financial services, which is exempt in many countries including the 28 EU member states. In previous discussions, a VAT rate of 5% has been floated.
The member states of the GCC are: Saudi Arabia; UAE; Kuwait; Qatar; Oman and Bahrain.