Gulf VAT update

Sat 2nd Sep 2017

Saudi Arabia published its VAT legislation and implementation regulations ahead of the launch of the indirect tax on 1 January 2018.

UAE has also published its VAT legislation, but the detailed implementation guidance is still outstanding.  It also plans to implement VAT from 1 January 2018.  The other four of the six Gulf Cooperation Council states are committed, under the GCC VAT Agreement, to introducing VAT by January 2019.

Saudi Arabia has largely adopted the GCC legislation into its domestic law, with little variation.  This is an original approach – most such regional harmonised systems use the supranational instrument merely to limit the power of the member countries.  The UAE seems likely to take up more derogations from the VAT Agreement, including more exemptions from VAT.

Whilst both states have a VAT registration threshold, Saudi Arabia’s threshold of SAR 375,000 is relaxed to SAR 1million in 2018.



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