31 May 2017
The Gulf Co-operation Council (GCC), which consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, has published a VAT treaty which outlines its proposed January 2018 common VAT regime.
This treaty will outline the structure of the harmonized VAT regime across all six states, and will be used as a guide for the states to implement their own local VAT legislation.
The treaty is not legally binding on the member states and some of the key features can be seen below:
- Since the GCC will constitute a free trade zone, the treaty will allow businesses in separate states to sell goods and services to each other VAT free, this will mirror the current concept applied in the EU
- Businesses can distance sell goods to consumers in other member states subject to thresholds
- The standard VAT rate will be 5%
- Imports will be subject to VAT at clearance in the country of arrival; exports will be exempt
- VAT derogations where states can choose to tax on such things as Health and medical supplies and foodstuffs, but this list must be agreed between the states.