After the meeting of the Committee of Financial and Economic Cooperation of Gulf Cooperation Council (GCC - an organization consisting of Saudi Arabia, Bahrain, Qatar, UAE, Oman and Kuwait), the Deputy of Minister of Finance of the UAE, Younis Haji Al Khouri, stated that the GCC decided to impose value added tax (VAT).
Date of introduction of the tax is still unknown but is planned gradually during the three years. In order to prevent smuggling and competition, introduction will be on the territory of the six countries at the same time. It is also reported that from the list of goods and services, taxable by VAT, will be excluded health care, education and social services and 94 product items. Also, VAT will be charged at a higher rate on some of the goods such as luxury goods, alcohol and tobacco.
The exact tax rate is unknown yet, but previously the International Monetary Fund recommended the GCC countries to establish the VAT at the rate of 5%.
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