The text of the GCC Single Agreement on VAT (VAT) was published by the Kingdom of Saudi Arabia (in Arabic). Single Agreement on Value Added Tax (VAT) of the Cooperation Council for the Arab States of the GulfThe Single Agreement on VAT of the Cooperation Council for the Arab States of the Gulf was published by UM AL-QURA in its number 4667 of H1438/7/24. This agreement aims to define the single legal framework for the introduction of VAT in the GCC countries, which applies to the supply of goods and services. The Kingdom`s agreement was given by Royal Decree (point m/51 of H3/5/1438). VAT is a consumption tax that is added at every stage of the supply chain, from production to the final consumer for a thing or service. Instead of a turnover tax that collects the entire consumption tax at the end of the supply chain, this tax will be distributed throughout the supply chain. The member states of the Gulf Cooperation Council (GCC) have adopted a single agreement on value added tax (VAT). This agreement establishes the framework for the introduction and application of VAT in all Member States. It is up to each Member State to implement the framework through legislation or other processes. Saudi Arabia and the United Arab Emirates were the first to announce a VAT that will come into force on January 1, 2018. The treaty is sometimes referred to as a framework agreement, and that`s a good name – it defines the “wireframe” of a collaborative VAT system between GCC countries.
It should be remembered, however, that this is a treaty and not a law, and is therefore essentially an agreement between countries. It`s not a document taxpayers can rely on per se – one has to comply with local implementing laws to find the exact mechanics of VAT in each country. At the time of the letter, only the Saudi VAT Bill (which is itself essentially a framework document with no details on what will be void or exempt in the contract) is available, but the details are beginning to appear. In the meantime, the Treaty provides important guidance on how we can expect the VAT system to work. There is also considerable flexibility granted to countries in dealing with some other important sectors: government agencies, protest companies (under international agreements), farmers and fishermen who are not registered for VAT, as well as citizens who build their homes. Countries have flexibility in applying VAT to these groups – they can either refund VAT to them or exclude them from paying tax on deliveries to them. The UAE has confirmed that it will only allow refunds and only in the case of certain government agencies, qualified protest companies and citizens who build their own homes. However, supplies to these companies in the United Arab Emirates are taxed in accordance with normal VAT rules and VAT is chargeable.
What other countries are going to do is not clear, but there is a possibility of different treatment of deliveries to these companies, based solely on the status of the recipient – this is perhaps quite complex. VAT (VAT) raises complex issues for many businesses. The GCC countries of the Gulf Cooperation Council are in the process of introducing VALUE ADDED TAX (VAT). A new practical guide that serves as a prediction and strategic plan for the first 100 days of VAT in the UAE A frequently asked question is whether the GCC VAT system is based on the European Union model or on the more modern systems in the new VAT application countries (e.g. B Singapore or New Zealand). Well, you have to start with a look at the comparators, and the only comparison with a multi-country VAT system is the EU. That is why it has similarities with the EU VAT system. The similarities with the EU are mainly due to intra-company trade (and certain services) between businesses (B2B) and private consumers. . . .