On 16 June 2016, the Finance Ministers of the Gulf Cooperation Council (GCC) held an extraordinary meeting in Jeddah, Saudi Arabia on GCC Value Added Tax (VAT). GCC States - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates that make up GCC - will most likely introduce VAT on 1 Jan 2018 or by 1 Jan 2019 at the latest.
On 15 June 2016, the Undersecretary of the United Arab Emirates’s (UAE) Ministry of Finance (MoF) Mr. Younis Al Khoury, disclosed that companies in the UAE that report annual revenues over 3.75 million AED (US$1.021m) will be obliged to be VAT registered. The rate of tax is likely to be set at 5%.
According to surveys not many businesses have an adequate accounting systems to deal with VAT. Besides that lots of businesses lack the VAT knowledge of how a VAT works. Investments and training are needed to be ready in time.
To get VAT ready the following actions should be considered.
- Assess the business impacts
- Amend IT systems and business processes to the new situation forecasted and
- Review existing contracts and set rules for new contracts
For example, Qatar has already made progress to prepare its tax administration systems for VAT and from July 2016 the focus will be to prepare businesses for VAT.
Roadmap, overview of SMEs needed and a Bahamas case study
OECD - VAT In GCC: Facts and Lessons
Written by Richard Cornelisse
Richard advises multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework.
He started his career as a manager at Arthur Andersen and then became a partner in EY where I led the indirect tax performance team for Netherlands and Belgium. Currently he is a senior managing director of Key Group.
Richard has over 20 years’ experience advising clients on international VAT issues. He is specialized in the tax aspects of financial transformations, shared service centre migration, and post merger integration work. Richard is also somewhat of a mentor, giving back to the profession. If you are interested in conversation and discussion, please feel free to contact him.