Gulf States move closer to VAT implementation
- Mar 31, 2015 | Richard Asquith
The member states of the Gulf Cooperation Council (GCC), which includes the United Arab Emirates, Oman, Saudi Arabia, Qatar, Kuwait and Bahrain, have concluded a general framework for the implementation of VAT. This includes the outline of a customs union, and key element for a unified VAT and trading zone.
The details rules and legal framework of such a regime will be drawn up for the next GCC meeting in May 2015.
The Gulf States have been in discussions surrounding the implementation of VAT for many years. In 2007 there was broad agreement on the terms, including a potential standard VAT rate of 5%. However, talks stalled as the price of oil rose and the need for new fiscal revenues retreated.
However, the latest plunge in oil prices down to below $60 per barrel has brought the need for a widening of the tax base back centre-stage.