The President of Qatar’s General Tax Authority, Mr. Ahmad Eissa Al Mohannadi, recently confirmed in an interview with the local Arabic newspaper, Al Sharq (published on November 7, 2021), that Qatar was still committed to introducing VAT as per the GCC Unified Agreement for VAT that was signed by all GCC member states in June 2016.
In the same interview, he added that he has not expressed any reservation regarding the introduction of VAT and that the tax is currently under legislation.
Qatar would join the UAE, Saudi Arabia, Bahrain and Oman in introducing VAT. While these Gulf countries all initially introduced VAT at a standard rate of 5% as per the GCC Unified Agreement for VAT, Saudi Arabia raised its VAT rate to 15% from July 1, 2020 and Bahrain will raise its VAT rate to 10% from January 1, 2022. It is also anticipated that Kuwait will introduce VAT in 2022.
While we await the legislative process and the release of draft legislation and guidance, businesses should undertake preliminary impact assessments on their business and supply chain. From experience across the other Gulf states, VAT is not just a tax issue but really impacts the entire business and multiple stakeholders.
Before tax legislation can be applied, businesses should review their systems, data and processes to identify the extent they will need to change under VAT and start drafting a project plan.
