Gcc vat framework agreement pdf

The gcc vat framework is now expected to be finalized and formally announced by mid2016. On 20 april 2017, the gulf cooperation council gcc vat framework agreement was published in the official gazette. Bahrain will be the next country to implement five per cent valueadded tax vat after the uae and saudi arabia as part of the gcc framework agreed between the six states, according to tax experts. The vat in gcc agreement on a common gcc vat law framework. Minister of finance darwish al beloushi that the gcc countries had reached an agreement on a common vat rate of 5%. Gcc initiative modelled on the eus vat regime the gcc framework agreement will be the basis for national vat laws across the gcc optional vat treatment for education, health, government sector, real estate, financial services, etc. The unified agreement for value added tax vat across. Gcc countries sign common value added tax framework agreement. This document is a translated english version of the gcc vat framework agreement originally published in arabic. Pursuant to the resolution adopted by the gcc supreme council in the 36th session held in riyadh during the period 910 december 2015, to set a unified legal framework for the introduction of a general tax on consumption in the gcc countries called the valueadded tax vat.

Some key official statistics will be impacted by the vat. The text of the agreement has been published in the official. The representatives of the member states of the gulf cooperation council gcc confirmed the introduction of a formal vat system across all six member states through the signing of the vat framework treaty. A common vat framework gcc member states agreed on a common vat framework treaty tax authorities and vat legislation in uae, the setting up of federal tax authority fta announced in november 2016 the federal national council fnc of the. And whereas this agreement aims to establish a common legal framework for the introduction of a general tax on consumption in the gcc known as vat levied on the. The gcc vat agreement formally the common vat agreement of the states of the gulf cooperation council was signed in 2017 and published in the saudi arabian um alqura dated 21 april 2017.

Detailed discussion the gcc vat framework is now expected to be finalized and formally announced by mid2016. And whereas this agreement aims to establish a unified legal framework for the introduction of a general tax on consumption in the gcc known as vat levied on the import and supply of goods and services at each stage of production and distribution. Unified vat agreement for gcc countries, um alqura 21 apr. Saudi arabia ratified the gulf cooperation council gcc value added tax vat framework agreement by royal decree no.

M51 dated on 03051438h corresponding to 31 january 2017. The unified agreement sets out the framework under which vat can be implemented in each of the gcc member states. The framework includes agreement on certain matters but allows member states discretion on how to treat others. A framework agreement for value added tax is expected to be finalised at the forthcoming meeting of gcc financial and economic cooperation committee in october this year.

Companies are grappling with the interim treatment of intra gcc supplies. The advent of gcc vat in the gulf region is likely from 1 january 2018 and this would cause a paradigm shift in the business dynamics of this region. The information contained herein is a translation of the the value added tax vat framework agreement of the cooperation council for the arab states of the gulf. The gulf cooperation council gcc value added tax vat framework agreement for the arab states has been published by the kingdom of saudi arabia in the official gazette um al qura by way of circular number 4667 dated 21 april 2017. Unified vat agreement uvat is a framework agreement signed by all six gcc countries. This document is a bilingual replication of the unified vat agreement for the gcc but should not to be relied upon either in arabic or english version and is. Executive summary on jan 30, 2017, the shura council in saudi arabia announced the approval of the gulf cooperation council gcc value added tax vat framework agreement. This legal agreement has set out the framework to implement vat in each of the member states. The unified agreement provides the framework for the operation of vat across the gcc. Within that agreement, each of the gcc countries will introduce laws to enact the vat. If vatcoin is adopted by the gcc as the exclusive currency for payment of vat in the gcc, it will eclipse by.

Vat is a paradigm shift for countries and companies based in the gulf cooperation council gcc. It is charged and collected by a taxable person and remitted to the tax authority. The key features of the agreement are summarized below. The vat framework sets out the main rules governing the operation of vat in the gcc. Vat should apply to most supplies of goods and services that are considered to be. Member states retain some flexibility, such as how to treat healthcare, education and free zones for vat purposes. Common gcc framework vat will be implemented in the uae with effect from 1 january 2018. Countryspecific updates gulf cooperation council gcc. The document is not intended to address the circumstances of any particular individual or entity. The gcc vat framework agreement will be the overarching legislation, and each gcc member state will adopt its provisions into its own domestic vat law. January 2018, further to the gulf cooperation council gcc vat framework agreement, and the first vat returns filed on 28 february 2018, businesses are beginning to adapt to the realities of conducting operations in the gcc within the new vat regime. This framework agreement sets out the underlying principles of vat laws for the six gcc countries. In case of a disagreement between the translation and the original version arabic, the arabic version will prevail. Gcc countries may be need to take steps that would create the framework for a virtual tax system e 2 june 20 1 0 18.

The publication of the domestic vat laws follows the signing of the gcc vat framework agreement by each of gcc states to collectively implement vat governed by common principles agreed between the countries. Saudi arabia officially published the gcc vat framework agreement in its official gazette saudi arabia ratified the gulf cooperation council gcc value added tax framework agreement by royal decree no. The provisions of the gcc framework agreement will be transposed into domestic tax law in each of the gcc states prior to the effective date. Common vat agreement of the states of the gulf cooperation. Bahrain was the last country among the sixmember gulf cooperation council gcc bloc to sign the common framework agreement, it added. A common vat framework gcc member states agreed on a common vat framework treaty tax authorities and vat legislation in uae, the setting up of federal tax authority fta announced in november 2016 the federal national council fnc of the uae approved the tax procedures law in march 2017. This paper proposes that the gulf cooperation council gcc 2 adopt vatcoin in its vat framework. The vat framework becomes effective when at least 2 members ratify the framework. Rather, there are specific rules for determining the place of supply for such transactions. Gcc will introduce a value added tax vat in accordance with a common framework agreement. The framework agreement provided a common set of vat rules on the basis of which the separate gcc countries agreed to introduce their own vat regimes domestically. Issuance of federal law in uae concerning tax procedures, which sets the foundations for the planned uae tax system, regulating the administration and collection of taxes. It sets out the common basis and definitive rules which apply to the imposition of gcc vat by the member states. And whereas this agreement aims to establish a unified legal framework for the introduction of a general.

Gcc framework agreement for vat likely in october youtube. As the unified gcc tax agreement will only be a framework agreement which sets. Gcc releases vat framework tax united arab emirates. An activity which is done continuously and on a regular basis, it includes commercial, industrial. The unified agreement for value added tax vat of the. Vat overview the gcc states have worked together to develop a framework for the introduction of vat. The gcc bahrain, kuwait, oman, qatar, saudi arabia and the united arab emirates signed a vat framework agreement on the introduction of vat. Each gcc member state will implement the framework through legislation and other instruments.

Jul 21, 2017 the unified agreement sets out the framework under which vat can be implemented in each of the gcc member states. Cooperation committee the completion of all the requirements necessary to pass the common vat agreement of the states of the gulf cooperation council and signing it. The gcc vat agreement formally the common vat agreement of the states of the gulf cooperation council was signed in 2017 and published in the. At the time, obaid al tayer, the minister of state for financial affairs, went on to say that once the framework agreement on implementation of vat is reached, gcc countries have time from. Aug, 2016 a framework agreement for value added tax is expected to be finalised at the forthcoming meeting of gcc financial and economic cooperation committee in october this year. The value added tax vat framework agreement of the.

The unified gulf cooperation council value added tax framework agreement released on 03 may 2017 disclaimer. Except where the zero rate applies, vat will be charged at a standard rate of 5%. The framework agreement sets out a unified set of principles for vat as a means for the individual gcc states to implement vat legislation. The unified vat agreement for the cooperation council for. Saudi arabia officially published the gcc vat framework. The provisions of the gcc framework agreement will be transposed into domestic tax law in each of the gcc states prior.

Vat law to be implemented simultaneously in all gcc countries. All in the details for value added tax in the gcc the. Officials at the saudi arabian ministry of finance have indicated that the vat regime will be applicable from jan 1, 2018, and a 5% levy will apply to goods and services as. If a gcc agreement cant be reached, gcc countries could decide to implement vat individually. This paper proposes that the gulf cooperation council gcc2 adopt vatcoin in its vat framework. Implementing vat will have implications for businesses and new taxpayers, both in bahrain and abroad, directly andor indirectly. Key points from the gcc vat framework agreement vat is a tax on the consumption of goods and services. The agreement was ratified by saudi arabia through royal decree no. The unified gulf cooperation council value added tax. The gcc countries do not have immediate needs to increase their tax revenue.

Bahrain will be the third gcc state to implement vat. Basis of charging vat the gcc framework agreement sets out the basis on which vat is charged. Gulf cooperation council to implement vat regime in 2018. Common vat agreement of the states of the gulf cooperation council. Gcc framework agreed and passed confirmation of local plans by all gcc countries, for introduction from 1 january 2018 vat implemented in egypt in 2016 new tax on vacant urban land in saudi arabia new excise duties on unhealthy alcohol and sugarbased food products increased desktop or field audits of source documentation during tax.

The text of the agreement has been published in the official gazette um al qura by way of circular number 4667 dated 20 april 2017 2471438. As part of the objectives of the charter of the arab states of the gulf cooperation council gcc, a policy designed to strengthen regional cooperation, the gcc member states have agreed to sign a unified vat agreement to implement value added tax vat. Agreement for vat was published in the official gazette of one of the member states, saudi arabia. Vat agreement is finalized and adopted by all the gcc countries. Page 12 gcc value added tax economic activity in order to be classed as a taxable person, a person must carry on an economic activity in the gcc vat framework agreement, economic activity is defined as follows. Once the agreement is ratified, each member state can interpret the framework into its own local law and implement vat. In another milestone towards the implementation of vat across the gulf cooperation council, the unified agreement for vat was published in the official gazette of one of the member states, saudi arabia. Each gcc country to have its own vat law formulated in line with common gcc vat framework.

Shura council approved of gulf cooperation council vat. Gcc vat treaty deloitte middle east indirect tax tax. The unified vat agreement for the cooperation council for the. Gcc vat in united arab emirates, saudi arabia and bahrain. As such, the gcc uavat contains predictable elements. Pursuant to the resolution adopted by the gcc supreme council in the 36th session held in riyadh during the period 910 december 2015, to set a unified legal framework for the introduction of a general tax on consumption in the gcc countries called the valueadded tax. Arabic and english text of the gcc valueadded tax vat. Executive regulations on value added tax to implement value added tax vat in the uae by 1 january 2018. According to the gcc framework agreement and the vat regulations in the uae and ksa, intra gcc supplies of goods and services are not treated as exports.

Release of vat framework agreement by gcc aimed at introducing a regionwide value added tax system in 2018. The six gulf cooperation council gcc member states, saudi arabia ksa, bahrain, kuwait, oman, qatar and the united arab emirates uae, agreed and signed a framework agreement for the introduction of value added tax vat at the end of 2016. Gcc initiative modelled on the eus vat regime common gcc framework the gcc framework agreement will be the basis for national vat laws across the gcc uae vat implementation expected to go into effect in the uae on 1 january 2018 time for implementation is now only 6months current vat developments. The unified agreement for value added tax vat of the cooperation. By admin acca, acca f7 financial reporting, acca f9 financial management, articles, pdf material, strategic business leader, strategic business reporting 0 comments. Pan gcc legislation the framework agreement the gcc framework agreement is an important source of rules. All gcc countries are working to implement vat by 1 january 2018, to avoid distortions arising from intragcc. The unified vat agreement for the cooperation council for the arab states of the gulf was published by um alqura in its issue number 4667 dated 21 april 2017. David stevens, vat implementation leader, ey, expects bahrain, qatar and oman to implement in early 2019 though no firm. The gcc uavat provides the framework for the introduction of value added tax vat in all six gcc member states. Under the framework agreement, the gcc countries should introduce vat at a standard rate of 5%. May 03, 2017 the gulf cooperation council gcc value added tax vat framework agreement for the arab states has been published by the kingdom of saudi arabia in the official gazette um al qura by way of circular number 4667 dated 21 april 2017. All gcc countries have signed the muchdelayed unified value added tax vat framework agreement, a statement issued by the kpmg said.