GCC finance ministers to discuss unified VAT regulations in Bahrain

Finance ministers from the six GCC states are set to meet in Bahrain this week to discuss the regulations required for implementing value added tax (VAT) in the region from early next year.

The GCC Financial and Economic Cooperation committee will hold its 106th meeting in Bahrain on Thursday, official news agency WAM reported.

Finance ministers will discuss their findings related to “establishing appropriate mechanisms” to implement the two unified conventions on VAT and selective tax ratified by the member states, the report said.

All the six GCC states are anticipated to introduce a 5 per cent VAT simultaneously from January 2018, a senior official confirmed in February.

Read: All six GCC nations plan simultaneous VAT adoption in January 2018

According to EY, under the GCC VAT framework agreement, member states who do not introduce the tax in 2018 will have up to one year to implement it.

The UAE expects to release its domestic VAT Law before the end of the first half of 2017, with detailed executive regulations to follow shortly after. So far, officials have confirmed that supplies of residential property including sales and leasing, as well as supplies of local transport, such as taxis, buses, trains will be exempt from teh tax. Meanwhile, a zero rate of VAT will be applied to both healthcare and education services.

Read more: Residential property sales and leasing in UAE to be exempt from VAT

Region-wide, VAT (at a rate of 5 per cent) is expected to produce more than $25bn of revenues per annum for the six GCC countries, according to EY.

The audit and consultancy firm said VAT would allow the fix GCC countries to amend their tax policy and other fees and charges and increase infrastructure investments.

Also read: Oman invests $11.4m in VAT system

Along with discussion about the tax, the committee on Thursday will also address issues such as the linkage of payment systems across the GCC member states, WAM reported.

It will also consider expanding economic integration among the GCC countries and the convergence of incentives and benefits to the private sector.

The meeting will be preceded by a preparatory meeting for GCC finance ministers on Wednesday, the report added.

Also read: Revealed: Countries with the highest VAT rates