As reported in the previous issue of Indirect Tax News, VAT will be introduced in the Member States of the Gulf Cooperation Council (GCC). These Member States comprise Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates (UAE). It has already been announced that the UAE will introduce VAT on 1 January 2018 at a rate of 5%, and since been confirmed that Kuwait will also
The remaining four Member States of the GCC have the option of implementing VAT on the same date as Kuwait and UAE or by 1 January 2019, and we await their confirmation of when VAT will come into force in their territories. The VAT rate for these states (Oman, Bahrain, Qatar and Saudi Arabia) is expected to be between 3% and 5%. Recent press reports suggest that all four states have reached agreement to adopt the 5% rate, although no formal announcements have yet been made to this effect.
Also, on 15 June, a representative of the UAE Ministry of Finance explained that VAT will be introduced in the UAE in two phases.
In Phase 1, companies with recorded revenue of more than AED 3.75 million are obliged to register for VAT. Also within Phase 1, companies with revenue between AED 1.87 million and AED 3.75 million will have the option to register for VAT. In Phase 2, all companies will have to register for VAT, though the date for Phase 2 is still under discussion. This may indicate the manner in which other GCC countries will phase in VAT.
Recognising our international and local clients’ need for support while VAT is implemented, the BDO Member Firms in the GCC will appoint an experienced VAT partner to be based in the GCC this year. Working with VAT experts from across BDO internationally – the BDO Member Firms in the GCC will also host seminars and workshops to provide practical advice on the VAT implementation and its impact on our clients’ businesses.
If you would like further details in relation to this matter or would like to be included on our email listing for follow up briefings, please contact [email protected].