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Gulf VAT challenges

  • Feb 15, 2017 | Richard Asquith

Gulf VAT challenges

Governments and companies in the six Gulf states are getting ready for the implementation of Value Added Tax from 1 January 2018.  The new consumption tax has been set at 5% across the region, with agreement on harmonised rules to boost trade.

There remain several obstacles ahead for businesses, including:

  • A lack of local expertise in VAT
  • There is still no legislation published which makes for an extremely tight timetable
  • Investment in IT and ERP system up-grades to manage VAT calculations and reporting
  • Varying intra-state VAT co-operation which could impact businesses providing goods are services within the region
  • For highly competitive industries, companies may not be able to pass on to the final consumer the full VAT charge, meaning a hit to profit margins
  • For exempt goods or services, there will be the irrecoverable cost on input VAT suffered
  • For all sectors, the imposition of VAT will reduce incomes and consumer spending power

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: richard.asquith@avalara.com. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.