The Gulf Cooperation Council will start implementing VAT at a
rate of 5% from 1 January 2018.
The Gulf Cooperation Council (GCC) – of which the UAE and
Qatar are member states along with Saudi Arabia, Kuwait, Bahrain,
and Oman – will start implementing the Value Added Tax
(VAT) at a rate of 5% from 1 January 2018.
Currently the GCC is in the process of approving a common legal
framework for the introduction of a VAT system. This VAT framework
is expected to be finalised at the next meeting of the GCC
Financial and Economic Cooperation Committee, now in October
The common VAT framework will form the basis for a national VAT
system that will be implemented in each of the GCC states. Each
member state would still be required to issue its own national VAT
legislation, and will have the authority to determine specific VAT
rules in certain areas. The objective of the common VAT framework
is to introduce a standard, fully-fledged VAT system in each member
What is VAT in the GCC?
The VAT in the GCC will – most likely – be based on
the European system and will be charged at each step of the
'supply chain'. Ultimate consumers generally bear the VAT
cost while businesses collect and account for the tax, in a way
acting as a tax collector on behalf of the government. A business
pays the government the tax that it collects from the customers
while it may also receive a refund from the government on tax that
it has paid to its suppliers. The net result is that tax receipts
to the government reflect the 'value add' throughout the
If a business doesn't collect the VAT from its customers
where it should, it is actually the business that becomes liable
for the VAT. It is therefore very important for any businesses to
ensure their VAT compliance process is functioning perfectly. As
VAT is a turnover tax, it also means the liabilities, or missed
opportunities on the recovery side, can build up fast.
Registering for VAT
Not all GCC businesses will need to register for VAT. In simple
terms, only businesses that meet a minimum of AED 3.75m of annual
turnover will have to register for VAT. Between AED 1.78m and AED
3.75m the registration for VAT is voluntary.
Also, businesses may not need to register with the government if
they only provide goods and services which are not subject to
What are the VAT-related responsibilities of businesses?
All businesses in GCC member states will need to record their
financial transactions and ensure that their financial records are
accurate and up-to-date. Businesses that meet the minimum annual
turnover requirement (as evidenced by their financial records) will
be required to register for VAT. Businesses that do not think they
should be VAT-registered should maintain their financial records in
any event, in case they later need to establish whether they should
These businesses generally:
must charge VAT on taxable goods or
services they supply
may reclaim any VAT they've paid
on business-related goods or services
need to keep a range of business
records which will allow the government to check that they are
A VAT-registered business must report the amount of VAT it has
charged and the amount of VAT it has paid to the government on a
regular basis. This will be a formal submission. If a business has
charged more VAT than it has paid, it must pay the difference to
the government. If a business has paid more VAT than it has
charged, it can reclaim the difference.
Talk to us
TMF Group has been a global VAT service provider for decades.
Our experts are very familiar with VAT and know all the pitfalls
and opportunities that the introduction of VAT in the GCC will
Our VAT experts in the UAE and Qatar can support you with:
Checking your contracts are up to
date and considerate of VAT
Adjusting your accounting and
reporting systems so they are ready to account for VAT
VAT training in your company
led by seasoned, international VAT experts
Regular updates on new developments
We can also help you with your VAT matters outside the Middle
East. As the world's largest independent VAT service provider,
we file more than 35,000 VAT returns annually for our global
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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On 10 May 2016 in Mauritius, representatives of the governments of India and Mauritius signed an agreement which provided the amendment of the provisions of the double tax treaty agreement that was signed between the two countries on 1983.
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