VAT in Gulf Cooperation Countries (GCC)

Valued Added Tax (VAT) in the Gulf Cooperation Council Countries (GCC).

In June 2016, all 6 Gulf Cooperation Council (GCC) countries signed a Common VAT Agreement pledging to introduce a 5% VAT rate. The following summary of various countries, provides an insight into the implementation dates since this agreement.

Saudi Arabia

The Kingdom of Saudi Arabia introduced VAT for the first time on 1st Jan 2018 at a rate of 5%. This rate was tripled on 1st July 2020 when the Ministry of Finance announced an increase to 15% to assist with funding the Corona Virus relief efforts. The KSA is the first of the Gulf Cooperation Council States to step away from the originally agreed GCC standard rate of 5%. In 2020 Saudi Arabia’s Zakat Tax & Customs Authority (ZATCA) announced plans to roll out a new E-invoicing System with a mandatory rollout to certain businesses effective 1st Jan 2023.

UAE (United Arab Emirates)

A VAT system with an effective date of 1st Jan 2018 was implemented in the UAE at a rate of 5%. The Mandatory registration threshold of 375,000 AED on the total value of taxable supplies and imports was applied. Businesses can register for VAT on the E-Services section of the Federal Tax Authority website.

Bahrain

VAT was first introduced in Bahrain on 1st Jan 2019. All entities making annual supplies exceeding the mandatory threshold of 37,500 BHD were required to register for VAT with the National Bureau for Revenue to obtain a VAT registration cert and start collecting VAT. In Dec 2021 legislation was passed to increase the VAT rate from 5% to 10% effective from 1st Jan 2022.

Oman

Oman was the fourth GCC country to implement a VAT system on 16th April 2021 at a rate of 5%. Registration is mandatory for a business with annual supplies in excess of 38,500 OMR.

Kuwait

The Kuwait parliament has delayed the VAT implementation date several times however the International Monetary Fund has confirmed this is expected to be introduced in 2022.

Qatar

Implementation of Qatar’s VAT system was expected 2019 but implementation has been postponed and is now expected during 2022.

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