New Year brings with it splendid new opportunitiesJanuary 4, 2016 10:46
VAT . . . a Good Thing?
The tax-free environment in the GCC is set to change, VAT will help GCC economies experience diversified growth, says Mas Meghji
May 17, 2012 3:18 by kippreport
The tax-free environment enjoyed in the GCC is one of the key attractions for businesses and global talent to the region, particularly the UAE. This, however, is set to change, and while experts say the value-added tax might change the attractiveness index of the region temporarily, VAT will help GCC economies experience diversified growth.
For now, the Gulf Cooperation Council countries have delayed the application of the planned VAT indefinitely, and the UAE won’t impose any new tax this year. Younis Haji Khouri, Undersecretary of the UAE’s Ministry of Finance told a Sharjah-based Arabic newspaper that after consultations among the various parties concerned in the six-member economic bloc, the GCC states have decided to defer the application of VAT until every member is ready with the internal systems and specialized staff required to implement such a tax.
The UAE’s Ministry of Finance has, in cooperation with other concerned authorities, prepared a three-year study on the dimensions of the application of VAT on the UAE society economically and socially, he said, and the report includes the potential scope of VAT, which, when implemented, would include goods and services. While Saudi Arabia has put systems in place and is ready to implement VAT theoretically, Qatar, Bahrain and Oman are working on developing the system. The other two members of the GCC, the UAE and Kuwait, have not made much progress. Although Dubai Customs had plans in 2008 to go ahead with VAT, it has pulled back since, possibly due to administrative and revenue distribution issues.