30 November 2016
Muscat: A framework agreement for value added tax is expected to be signed by the Gulf Cooperation Council (GCC) states shortly.
“The GCC common VAT framework will form the basis for the national value added tax (VAT) legislation to be issued by each GCC state,” said Nadine Bassil, director, indirect tax, at PwC, while addressing a seminar on VAT in Oman and the GCC.
Value added tax, which is a tax on consumption and is levied at each stage in the chain of production, will be introduced in the six-member GCC bloc at an expected rate of 5 per cent in the beginning of 2018.
GCC states are getting prepared for introducing VAT. “Some countries are in a more advanced stage than others. For instance, the UAE has issued a law for setting up a Federal Tax Authority and they are looking at recruiting people,” Bassilsaid, adding that Saudi Arabia is setting up a tax administration and “we expect them to recruit tax professionals.”
She also noted that several GCC states have already announced their intention to adopt VAT by January 2018 and others may follow at the latest by 2019. The intention is to have aharmonised system, which needs to be broad-based. “The need to reduce oil dependence has become even more critical and structured reforms are essential to promote diversification and non-oil sector growth in order to create jobs for the growing workforce.”
The average VAT, which is collected by businesses on behalf of the VAT administration, revenue is expected at 1.3 per cent of the gross domestic product of GCC states, according to an IMF estimate in 2012.
While designing the VAT law, countries need to ensure simple procedures for easy implementation, efficiency (which ensures low compliance cost) and certainty (which ensures limited need for litigation), noted Bassil. The tax law should be broad-based as well.
For levying tax under VAT regime, products and services are divided into three broad categories – products with standard rates, zero rates and exempted supplies. The zero rates are generally applicable to basic food items, exports, medicines and medical equipment. Also, the common exempted supply categories are healthcare, education, domestic passenger transport and residential dwellings. The companies have to be registered with the VAT administration.
The VAT seminar, organised by PwC to discuss key issues of VAT, focused on the practical steps that businesses can start to take ahead of the publication of VAT Law in Oman.
Muscat: A framework agreement for value added tax is expected to be signed by the Gulf Cooperation Council (GCC) states shortly.
“The GCC common VAT framework will form the basis for the national value added tax (VAT) legislation to be issued by each GCC state,” said Nadine Bassil, director, indirect tax, at PwC, while addressing a seminar on VAT in Oman and the GCC.
Value added tax, which is a tax on consumption and is levied at each stage in the chain of production, will be introduced in the six-member GCC bloc at an expected rate of 5 per cent in the beginning of 2018.
GCC states are getting prepared for introducing VAT. “Some countries are in a more advanced stage than others. For instance, the UAE has issued a law for setting up a Federal Tax Authority and they are looking at recruiting people,” Bassilsaid, adding that Saudi Arabia is setting up a tax administration and “we expect them to recruit tax professionals.”
She also noted that several GCC states have already announced their intention to adopt VAT by January 2018 and others may follow at the latest by 2019. The intention is to have aharmonised system, which needs to be broad-based. “The need to reduce oil dependence has become even more critical and structured reforms are essential to promote diversification and non-oil sector growth in order to create jobs for the growing workforce.”
The average VAT, which is collected by businesses on behalf of the VAT administration, revenue is expected at 1.3 per cent of the gross domestic product of GCC states, according to an IMF estimate in 2012.
While designing the VAT law, countries need to ensure simple procedures for easy implementation, efficiency (which ensures low compliance cost) and certainty (which ensures limited need for litigation), noted Bassil. The tax law should be broad-based as well.
For levying tax under VAT regime, products and services are divided into three broad categories – products with standard rates, zero rates and exempted supplies. The zero rates are generally applicable to basic food items, exports, medicines and medical equipment. Also, the common exempted supply categories are healthcare, education, domestic passenger transport and residential dwellings. The companies have to be registered with the VAT administration.
The VAT seminar, organised by PwC to discuss key issues of VAT, focused on the practical steps that businesses can start to take ahead of the publication of VAT Law in Oman.
© Times of Oman 2016
