Saudi Arabia: Unified VAT agreement of GCC states | KPMG | GLOBAL

Saudi Arabia: Unified VAT agreement of GCC states (in English)

Saudi Arabia: Unified VAT agreement of GCC states

The Kingdom of Saudi Arabia earlier this year released a unified agreement for value added tax (VAT) of the cooperation council for the Arab States. The unified agreement for VAT in the Gulf Cooperation Council (GCC) sets out the principles under which the new indirect tax system will be implemented in each of the GCC member states.

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Key points from of the VAT framework agreement for the GCC include:

  • VAT is a tax on the consumption of goods and services. It is charged and collected by a taxable person and remitted to the tax authority. 
  • A VAT rate of 5% will be charged on the supply of goods and services, unless zero-rated or VAT-exempt supplies.
  • Member states can choose to zero-rate or exempt the following sectors: education, medical, real estate, and local transport.
  • A taxable person will be required to register for VAT purposes if the annual value of supplies, exceeds, or is expected to exceed, the mandatory registered threshold of U.S. $100,000. 

Each GCC member state will need to enact its own domestic legislation to implement VAT locally by 2018.

The text of the framework agreement has been available only in Arabic. KPMG has prepared an unofficial English language version of the framework agreement text, translated directly from the original Arabic document. Read the English version of the VAT framework agreement [PDF 654 KB]

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