VAT Implementation

The Member States of the GCC confirmed the introduction of a formal VAT system throughout the GCC region via the “Unified VAT Agreement for the Gulf Cooperation Council”. This Agreement acts as the overarching framework for the introduction of VAT legislation in each Member State by stipulating certain principles which must be followed by all Members, while still allowing individual Member States to adopt different VAT treatments in relation to specified supplies.

Timing

The first two Member States to implement their own VAT legislation are Saudi Arabia and the United Arab Emirates (“UAE”). In each case the VAT legislation is intended to take effect on and from 1st January 2018.
As of the date of this Client Note, there is no official date published for implementation of VAT legislation by other GCC Member States but it is expected that with the entry into effect of a VAT regime in Saudi Arabia and UAE the other Member States are expected to follow in the short to medium term.