The Gulf Cooperation Council GCC countries are in the process of introducing Value Added Tax (VAT).
The GCC countries are in the process of introducing Value Added Tax (VAT).
The Gulf Cooperation Council (GCC) countries are in the process of introducing Value Added Tax (VAT) in order to move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.
The introduction of VAT is likely to start across the GCC from as early as 1 January 2018. As a consumption based tax to be levied on most goods and services, VAT is set to impact not only the tax function, but would also lead to a significant transformation in the way businesses are run, cutting across various business operations such as IT, supply chain, cash flows, marketing, accounting, etc. VAT readiness will require businesses to look at all of their business processes.
VAT is intended to be a tax on the end user/consumer and not be borne by VAT registered businesses. While VAT is imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services, it is intended to be a flow through cost for most businesses who will generally be able to recover the VAT on purchases, subject to various conditions.
Businesses making supplies subject to VAT exceeding an annual limit are generally required to register for VAT requiring them to collect VAT when making supplies to their customers. Certain businesses can be exempt from being required to charge VAT on their supplies. VAT is likely to significantly affect nearly every business in some way – and a 1 January 2018 start date leaves only a short window for businesses to prepare for VAT.
Will you be ready?