VAT framework agreed by GCC

All Gulf Cooperation Council (GCC) countries have now signed the Unified Value Added Tax (VAT) Agreement. The framework will form the basis for the national legislation which will be introduced in each GCC country. The framework will be made public shortly.

Whilst details remain thin on the ground, VAT is expected to be introduced in the GCC countries with effect from January 2018. We understand that the standard VAT rate will be 5% whilst there will be certain zero-rates and exemptions.

VAT is a consumption based tax which impacts every part of the supply chain, and businesses are strongly recommended to review their readiness for the implementation of VAT and the impact the tax could have on profit margins or on cash flow issues.

Businesses are specifically advised to review contracts which are currently in progress in order to determine whether they allow for VAT to be charged. VAT will also need to be considered for contracts which are currently in negotiation.

If you would like further information on the above, please contact Terri Bruce.

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