Vat Agreement Between Gcc Countries
April 14th, 2021
April 14th, 2021
Qatar was due to introduce a VAT system in 2019. However, no final date has been announced by Qatar`s tax authorities. Previously, in Qatar, caution was exercised with regard to the introduction of VAT. According to Doha Bank Ceo R Seetharaman, the introduction of VAT in Qatar “depends on several factors such as fiscal policy, sources of income and commodity prices. In my view, VAT could be deferred to assess how it works in the countries in the region where it will soon be implemented. GCC VAT Regimes – Situation in 2020 – In June 2016, the six GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia (KSA) and the United Arab Emirates (United Arab Emirates) signed the GCC Framework Agreement on VAT. The framework agreement provided for a common VAT law, on the basis of which the various GCC countries agreed on the introduction of their own VAT schemes on the national territory. In accordance with the framework agreement, GCC countries should introduce VAT at a standard rate of 5%. VAT should apply to most deliveries of goods and services provided within the relevant jurisdiction (including imports of goods and services).
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. The other three GCC countries have not yet introduced VAT. According to a recent statement from the Ministry of Trade and Industry, VAT will be introduced in Oman in early 2021. The Kuwaiti parliament also recently confirmed that the introduction of VAT would not take place until 2021 in Kuwait. In the meantime, no official position was received at the time of the introduction of VAT in Qatar. A zero assessment for international passenger transport and with international freight transport is expressly necessary. This includes transportation within the CCG and is not optional.
However, countries have a choice between exception, standard rating and zero rating for national passenger transport (the United Arab Emirates has confirmed that it will opt for the exemption, but other countries have not ruled on this at the time of the letter). 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. The Gulf Cooperation Council (GCC) VAT Treaty (TREATY) is a pioneering document for the Gulf region. It defines the framework for a VAT system between the six GCC countries, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The treaty therefore defines the basic rules for the economy and, as a result, they can begin with fairly detailed planning, even if national laws and implementing provisions may not be available.
We know that countries can act quickly if they have the political will to do so, so companies should be ready to respond, and they can now begin the planning process. We advise them to do so. The food, oil and gas sectors are also sectors where countries have a choice, although more limited – they can be either zero or rated by default for products. In the case of foodstuffs, there is a (non-public) list of nearly 100 items, which are mainly food, not prepared foods.