Speaking to Bahrain-based Gulf Daily News, EY’s top regional VAT consultant David Stevens said the period before and after the implementation in 2019 would mimic how VAT affected economies in the UAE and Saudi Arabia.
The Ministers of Finance of the Kingdom of Saudi Arabia, the United Arab Emirates, the State of Kuwait…
14 | the publication reaches you by | Bahrain News“From what we have observed in Saudi Arabia and the UAE, there is likely to be a pull forward of some discretionary spending ahead of the VAT commencement date that will then see a decline in such spending after the tax is introduced,” he said.
Saudi Arabia and the UAE were the first two countries to introduce VAT among Gulf countries on January 1, 2018 at a rate of 5%.
The tax, levied on goods and services at each point of sale, was also to be introduced in Oman, Bahrain and Kuwait.
However, Bahrain and Oman opted to delay introduction to 2019, while Kuwait is reportedly mulling implementation in 2021.
Bahrain will introduce VAT at the same rate, which will allow any impact on the economy to be “modest and short-term in nature,” said Stevens.
Sectors that VAT will be levied on are yet to be confirmed, he added, however it’s grow Bahrain’s revenues by up to 2% of the country’s GDP.
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The Arab states of the Persian Gulf are the seven Arab states which border the Persian Gulf, namely Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).This excludes the non-Arab state of Iran. All of these nations except Iraq are part of the Gulf Cooperation Council (GCC).
