Legislation and IT being readied for state to join Gulf Cooperation Council VAT union
The Gulf state of Qatar is making preparations for the introduction of Value Added Tax, with potential 2022 launch. This includes:
- A recent update of the tax authorities IT backbone
- Draft implementing legislation being circulated to limited numbers
The 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.
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 |
