Gulf states still considering VAT introduction

Sat 10th Sep 2011

Long terms plans to introduce a Value Added Tax in the six Gulf Cooperation Council (GCC) countries are still under review. Any introduction is likely not to come before 2015, at a potential rate of 5%.

GCC VAT plans to broaden tax base

The GCC countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates – have been evaluating the introduction of a consumption tax, such as VAT, for over five years. The primary objectives is to diversify the tax revenue base away from volatile oil revenues and create a broader tax base. A 5% rate has been targeted, which would avoid a inflationary leap – the average EU VAT rate is 20% – which should generate up to 3% of GDP. A VAT registration threshold of USD 1 million has been set.

Kuwait VAT first?

Several Gulf states are not ready for the implementation of VAT due to poor tax collection infrastructures. However, Kuwait will possibly be the first in 2013.