GCC states Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates will introduce (VAT) region in the region by 2018 the announcement was made starting this year in Dubai.
The GCC VAT framework is now expected to be finalized. The provisions of the GCC Framework Agreement will be transposed into domestic tax law in each of the GCC States prior to the effective date.
As per report by Gulf News, GCC VAT will not exceed 5 per cent even though in some European countries it can be as high as 20 per cent.
As VAT will not be applied on basic commodities — including food, drinks, medicines and other necessities — it will then have limited effect on the living standards. It will support government resources and help implement some developmental projects that would create more job opportunities and increase growth rates, report on VAT added.
Staple food items, school fees and health services will remain exempted from VAT. But fees paid for services, including small items such as cinema tickets and parking charges, may also be subject to VAT.
In a related development in Qatar, as part of its economic update, the Ministry of Development Planning and Statistics publicly confirmed for the first time that Qatar will introduce a 5% VAT in 2018 as part of the GCC-wide agreement.
However a number of GCC countries, similar to Qatar, have already made substantial progress on preparing their tax administration systems for VAT and from July 2016 onwards the focus will shift to preparing the business community for VAT.
The GCC States have agreed to implement their VAT regimes in 2018. Most countries will be working to implement by 1 January 2018 to avoid distortions arising from intra-GCC trade where one country has implemented VAT and another country does not have mechanisms to deal with charging VAT from business to business and onwards to the consumer. All GCC States will need to have implemented VAT by the end of 2018.
As per local daily The Peninsula Qatar enquiries have revealed that retailers and traders in Qatar are largely oblivious of the proposed tax. Many leading hypermarkets in Qatar seemed to have been caught off-guard. Many of the companies have reportedly disclosed that they had received no intimation about VAT either from the authorities concerned or the company’s auditors.