GCC VAT Inches Forward

By Global Tax Weekly

The seemingly never-ending deliberations over the proposed introduction of a value-added tax in the Gulf Cooperation Council (GCC) countries must be testing the patience of taxpayers to the limit. Will they? Won’t they? Will they? Won’t they? It’s almost like the plot of a soap opera! Perhaps this time they will. We were informed by UAE Deputy Ministry of Finance Younis Al-Khouri last week that the GCC is near an agreement that could see VAT introduced in 2018. However, I wouldn’t hold your breath. We’ve heard such pronouncements on many occasions over the last few years.

The reason most often cited for the delay is that some GCC member states are less prepared than others, technically and administratively. However, surely they have had long enough now to complete the necessary preparations? After all, this idea has been on the drawing board for several years. Maybe there is some other reason for the delay, such as a reluctance on the part of some GCC governments to take this leap. We are talking about some of the most lightly taxed jurisdictions on the planet after all, and economies in some parts have thrived as a result of an almost complete absence of taxation. Will VAT be the thin end of the wedge? It’s certainly the case that the UAE has been contemplating a future in which it can no longer depend on oil revenues, and the Government has hinted on several occasions over the past couple of years that a general income tax may be on the way. When this will happen, who it will apply to, and at what rates – these all remain a mystery. However, taxpayers tend not to like mysteries. They are in the business of certainties.

For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look

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