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Will VAT rate go up in GCC?
The GCC states will eventually increase value-added tax (VAT) rate, which is one of the lowest in the world, but it could take years before the regional government agree to hike it, tax experts said at a summit on Monday.
Surandar Jesrani, managing partner and chief executive officer (CEO) of MMJS Tax Consultancy, said the UAE and Saudi Arabia cannot unilaterally raise VAT as it is GCC-wide framework agreed among all the six member nations.
“The International Monetary Fund (IMF) is a driving factor as the whole GCC VAT is an IMF initiative. The GCC could increase VAT rate but we don’t know when. But it cannot be unilateral,” he said.
The IMF recently recommended that five per cent VAT levied in Saudi Arabia and the UAE as part of a GCC-wide framework should be raised, saying it is low by global standards. “The region really needs to understand when it is right time for the increase. Considering current economic situation, five per cent is fair now. However, there could be an increase,” Jesrani said.