Bahrain will be the next country to implement five per cent value-added tax (VAT) after the UAE and Saudi Arabia as part of the GCC framework agreed between the six states, according to tax experts.
The Ministers of Finance of the Kingdom of Saudi Arabia, the United Arab Emirates, the State of Kuwait…370 Views | the publication reaches you by | Bahrain News
“We hope all four will make public announcements as to their intended start dates after Eid Al Adha, so businesses can act with some certainty in their time consuming and essential readiness preparations,” Stevens said.
said as per the unified GCC VAT agreement, GCC member states are mandated that any 2 member states should to implement VAT law within 1 year. Hence, the UAE and Saudi Arabia introduced VAT on January 1, 2018 and ideally, all other GCC member states i.e. Oman, Kuwait, Qatar and Bahrain should implement VAT by January 1, 2019.
“In view of local economic and political considerations, I understand that the process of introduction of VAT in other GCC countries is at various stages of preparation with Bahrain likely to implement first followed by Oman and Kuwait,” he added. Jesrani said as per latest reports, Bahrain should implement VAT by January 1, 2019, though initial plan was to implement from October 1, 2018.
The Sultanate of Oman has announced that VAT would be introduced in 2019, most likely mid-2019. The Kuwaiti parliament is yet to vote on the VAT bill which should be introduced in the upcoming session before the year-end. Accordingly, the expected timeline of introduction of VAT in Kuwait is late 2019 or even 2020.
Based on news reports and public announcements by the Governments of Kuwait and Oman, Jesrani sees a delay in introduction of VAT in these countries.
According to EY, five per cent VAT is expected to produce revenues of over $25 billion per annum for the six GCC countries. This will allow them to amend the tax policy and other fees and charges and increase infrastructure investments.
David Stevens stated that under the GCC VAT Framework Agreement that all six GCC countries signed, there are a range of policy and administrative decisions that are left to each member state to make their own choices.
“These include the treatment of basic foodstuffs, real estate, oil and gas, financial services, education, healthcare and domestic transport. The 5 per cent VAT is the only positive rate though that can be used and rules around intra-GCC supplies, exports, international transport, the registration threshold (of $100,000 mandatory), and the need to issue tax invoices are all set out in the Agreement,” Stevens added.
Jesrani said the unified GCC VAT agreement provides member states the flexibility for taxing various sectors and industries as per local requirements.
Accordingly, there is definitely room for Bahrain, Kuwait and Oman to introduce a different VAT law than implemented by either UAE or Saudi Arabia so local dynamics are taken care.
However, considering that GCC is a unified commerce zone, Jesrani expects that the proposed laws may be similar to UAE and KSA in respect of taxing international transactions.
Global Experts in Leadership and Business Excellence will lead a powerful discussion focusing on improving organizational performance at…150 Views | the publication reaches you by | Bahrain News
Do you have information you want to reach our readers?
7 Action Movies You Can Not Miss In 2019