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Qatar VAT implementation – 2025 potential

Gulf state unclear when to join 4 other Gulf states by introducing 5%

The Qatari Prime Minister on 13 April 2023 has said no date has been set yet for the implementation of VAT. Qatar is progressing plans to introduce a 5% VAT regime, but it is now unlikely to be in 2014 given the legislative and preparation time required.

Along with the other five members of the Gulf Cooperation Council, Qatar signed the Value Added Tax Framework Agreement in 2016. This aims to create a VAT and Customs Union between the GCC sates which are: Bahrain; Kuwait; Oman; Qatar; Saudi Arabia; UAE.  Kuwait would be the last state not to have implemented VAT.

June 2022 – Minister of Finance indicates inflation worries may push out implementation of VAT

Finance Minister, H E Ali bin Ahmed Al Kuwari, has said this week that whilst tax reforms remain a central plan in the Arab Gulf state, the inflationary cycle may prevent a 2022 or 2023 launch.  Qatar had already delayed the introduction of a VAT regime during the COVID pandemic as petrol prices dropped.

Qatar is one of the two members of the Gulf Coordination Committee group of six states not to follow through on a VAT union.

Legislation and IT being readied for state to join Gulf Cooperation Council VAT union

Qatar has been making preparations for the introduction of Value Added Tax. This includes:

  1. A recent update of the tax authorities IT backbone
  2. Draft implementing legislation being circulated to limited numbers

The eventual VAT registration threshold is likely to be QAR 364,000 per annum (approx €88,600; $100,000).  The VAT reporting period is likely to be one month – although Qatar has the option to use quarterly reporting, including for smaller businesses.

Likely tax scope

  • Standard VAT rate of 5% on most goods and services
  • Zero rating: exports; international transport; and medicines
  • Exempt: financial services; health; residential property and land; education

Kuwait 2023 VAT introduction is being speculated on; but parliamentary opposition remains stiff. The other four Gulf Cooperation Council states have already introduced their VAT regimes as part of a GCC VAT and customs union agreement. This includes: Saudi Arabia; UAE; Bahrain; and Oman.  Saudi Arabia in 2020 hiked its VAT rate from 5% to 15% due to the slump in demand for oil in the midst of the COVID-19 crisis.

Gulf Cooperation Council (GCC) value-added tax (VAT) Framework Agreement  was signed by all six states. The Framework requires all member states to introduce VAT and establish national legislation, within the agreed parameters. This includes a single standard rate of 5%, with a zero-rate and exemption status.

The Framework is a treaty, not a law, however it provides a clear overview of how the VAT system is intended to be implemented in the region.

171 countries have a VAT or GST regime as at July 2022.

Arab Gulf GCC VAT implementations

2028+ Kuwait decides between VAT or excise taxes
2025? Qatar delays VAT on inflation worries
Jan 2022 Bahrain doubles VAT to 10%
16 Apr 2021 Oman introduces 5% VAT
1 Jul 2020 Saudi Arabia trebles VAT to 15%
1 Jan 2019 Bahrain launches 5% VAT regime
1 Jan 2018 Saudi Arabia and UAE introduce 5% VAT regime
2016 VAT and Customs Union agreement: Bahrain; Kuwait; Oman; Qatar; Saudi Arabia; UAE United Arab Emirates


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