The Gulf Cooperation Council countries are currently coordinating their tax policy with the aim to introduce a value-added tax (VAT) as soon as possible.
According to Younis Haji Al Khoori, Undersecretary at the Emirates’ Ministry of Finance, the introduction will begin as soon as any two GCC member states are ready to go.
The expected VAT rate is 3-5% with an exception for healthcare, education and a select 94 food items.
In last week’s issue of the Economist, Deputy Crown Prince Mohammed bin Salman bin Abdelaziz of Saudi Arabia already spoke about VAT, but stressed that there would be no income and wealth taxes. At the same time, the UAE Ministry of Finance are still considering the introduction of a corporate tax.
This is a significant move of the GCC countries and the Middle East towards a more complex taxation system – which won’t leave you unaffected if you do business in this region.
Any introduction of a new tax comes with difficulties. Misunderstandings, errors, compliance issues, dealing with unfamiliar legislation – In fact, in this case the overall concept of the new tax is completely foreign to the region.
Which means that to you, it is ever more important to make absolutely sure you can cope with the change. You may run your own accounting and payroll staff, or you may outsource – in any case you’ll need reliable information, and experts who know what they’re doing.
Again, I’m biased. But at Mercans, we’re familiar with every single one of the possible new introductions. Our people have worked in markets where VAT has been a reality for decades, and they know very well what it affects, and how such a system works.
If you’re sure you can cope, ignore this – but if you’re not, why not drop us a line? We’d be glad to give you an idea how the change will affect your business and help you set up everything to stay compliant with new laws and regulations.