The VAT agreements concluded under the GCC VAT agreement and excise duties are the basis of each country`s individual VAT and excise scheme. Each Member State adopts its own national VAT legislation, using agreed-upon principles as guidelines. The Single Agreement on VAT (VAT) of the Cooperation Council for Gulf Arab StatesThe Cooperation Council`s single VAT agreement for gulf Arab States was published by UM AL-QURA, number 4667, H1438/7/24. This agreement aims to define the uniform legal framework for the introduction of VAT in GCC countries, which is imposed on deliveries of goods and services. The kingdom agreed by royal decree (point m/51 of 5.05.1438). An article entitled CCG Country signed The VAT agreement already exists in the VAT regimes of Saved Items GCC – situation in 2020 – In June 2016, the six GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia (KSA) and the United Arab Emirates (VAE)) signed the GCC VAT Framework Agreement. The framework agreement provided for a common VAT law, on the basis of which the various GCC countries agreed on the introduction of their own VAT schemes on the national territory. In accordance with the framework agreement, GCC countries should introduce VAT at a standard rate of 5%. VAT should apply to most deliveries of goods and services provided within the relevant jurisdiction (including imports of goods and services). Saudi Arabia definitively approved the single agreement of the Gulf Cooperation Council (GCC) on the introduction of VAT on 30 January 2017, followed by an announcement by Bahrain`s finance minister, who confirmed that Bahrain had signed the agreement on 1 February 2017. The six GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) have all signed the agreement, paving the way for the introduction of VAT throughout the Gulf Cooperation Council in 2018.
The next steps are for local enforcement laws to be adopted in each country. An august 2018 article in the U.S. daily Khaleej Times, the launch date was scheduled for January 2019. This was confirmed later when the Bahraini Parliament approved the VAT agreement in January 2019. The treaty is sometimes called a framework agreement, and it is a good name, it defines the „wire framework” for a collaborative VAT system between gcc countries. It should be remembered, however, that this is a treaty and not a law and is therefore essentially an agreement between countries. It is not a document that taxpayers can count on per se – you have to look at local implementing laws to develop the exact mechanics of VAT in each country. At the time of the letter, only the Saudi draft of the VAT Act (which is itself essentially a framework document in which it is not rated at zero or exempt from the contract) is available, but details are emerging. In the meantime, the treaty provides important guidance on how we can expect the VAT system to work. Countries also enjoy great flexibility in the treatment of certain other important sectors – government agencies, event organisers (under international agreements), farmers and fishermen who are not registered for VAT and citizens who build their homes.
Countries have flexibility in applying VAT to these groups – they can either refund VAT or exclude them from paying taxes on deliveries delivered to them. The United Arab Emirates has confirmed that it will only accept refunds, and only in the case of certain public bodies, qualified event organizers and citizens who build their own homes.