GCC VAT Framework

The Gulf Co-operation Council (GCC), established in 1981, is the political and economic union of 6 countries in the Middle East region including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirate. “The Economic Agreement Between the GCC States” and “The GCC Customs Union” intertwines the countries for their economic progress through cooperation.

The Unified VAT Agreement for The Cooperation Council for the Arab States of the Gulf was published by UM AL-QURA in its issue number 4667 dated 21 April 2017. This legal agreement has set out the framework to implement VAT in each of the member states. The framework includes agreement on key matters but allows members to act on their own discretion for other matters. This accord was ratified in May 2018 with certain member states (UAE, KSA) announcing the implementation from January 2018.

The GCC-Framework comprises 15 chapters and a total of 78 articles that provide a comprehensive guidelines to member states.

These consist of:

  • Definitions and general principles, including scope
  • Supplies within scope, including supplies of goods and services and deemed supplies
  • Place of supply of goods and services, including special cases
  • Importation
  • Due dates and calculation of taxable values
  • Provision for exempt and zero-rate supplies
  • Liability to pay VAT
  • Input tax credits and VAT refunds
  • VAT registration obligations
  • Tax invoices and the record retention requirements
  • VAT return completions and filing requirements
  • Settlements or refunds
  • Intra-GCC arrangements

The framework allows for a basic rate of VAT of five percent as well as allowing for certain supplies of goods and services to be zero-rated or VAT exempt.

Companies with minimum turnover of $100,000 will be legally obliged to register while there will be provisions for voluntary registrations by any business.

Worldwide the VAT/GST rates range from as high as 27% to a low of 5%.

VAT Rates across the world

 Nigeria  5%
 Malaysia  6%
 Singapore  7%
 United States  0%–7.5%
 Japan  8%
 Switzerland  8%
 Lebanon  10%
 Russian Federation  18%
 Germany  19%
 United Kingdom  20%
 Ireland  23%
 Greece, Finland, Iceland  24%
 Norway, Sweden, Denmark  25%
 Hungary  27%