Unified Agreement For Vat Of The Cooperation Council For The Arab States Of The Gulf

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The GCC VAT Convention can be defined as a single VAT agreement by the Gulf Cooperation Council (GCC) for Arab states. VaE and Saudi Arabia will be the first countries to introduce VAT to the GCC from January 2018, while other Gulf countries will have until the end of next year to implement the tax system. However, the implementation of the excise in the United Arab Emirates in the fourth quarter of 2017 is envisaged. That is why companies in the United Arab Emirates, Saudi Arabia and other Gulf countries are preparing to introduce the VAT system. Given the date on which VAT will come into force and is expected in some Member States as of 1 January 2018, companies operating throughout the GCC will have to activate their VAT implementation plans if they are not already essentially in progress. There is a relatively short period of time to consider the impact of the introduction of VAT and make the necessary changes. The other GCC countries have delayed the introduction of VAT. Kuwait, Oman and Qatar are expected to introduce national VAT systems by 2020 or 2021. The reasons for these delays are not entirely clear. The slow political bureaucracy in Kuwait, the difficult economic environment in Oman and the boycott of Qatar posed real challenges to the introduction of the tax by early 2018. These countries have made further progress in adopting a modest excise rate in line with the GCC`s 2016 joint excise duty agreement. Qatar and Oman have introduced an excise duty in 2019 and Kuwait plans to introduce the tax in 2020. The Single Agreement on VAT (VAT) of the Cooperation Council for Gulf Arab StatesThe Cooperation Council`s single VAT agreement for gulf Arab States was published by UM AL-QURA, number 4667, H1438/7/24.

This agreement aims to define the uniform legal framework for the introduction of VAT in GCC countries, which is imposed on deliveries of goods and services. The kingdom agreed by royal decree (point m/51 of 5.05.1438). The single VAT agreement was published in the Official Journal of one of the Member States, Saudi Arabia, as an important step towards introducing VAT into the Gulf Cooperation Council. The single agreement is the framework for the exploitation of VAT throughout the GCC. Each GCC member state will apply the framework through legislation and other instruments. This step is another reason for companies operating in the Middle East to develop or continue their plans to introduce VAT. The VAT agreements concluded under the GCC VAT agreement and excise duties are the basis of each country`s individual VAT and excise scheme. Each Member State adopts its own national VAT legislation, using agreed-upon principles as guidelines.

After the adoption of the single VAT convention by the Gulf Cooperation Council in 2016, the Gulf Arab States are still in the early days of the introduction of VAT. VAT serves as an indirect tax on certain goods and services – often referred to as excise duties – which is collected wherever value is added throughout the supply chain.

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