A 5 per cent value added tax (VAT) rate to be introduced in the Gulf region from 2018 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.
“While the introduction of a tax may seem daunting to consumers and businesses alike, the overall impact for consumers is less than the usual annual inflation rate,” said David Stevens, newly appointed VAT implementation leader at EY.
“As businesses prepare to implement VAT across numerous sectors, they will need to invest in analysing, redesigning, developing and implementing updated systems, processes, contracts and business arrangements to match the requirements of the new tax system.”
The six GCC countries are expected to implement VAT from January 1 2018 to the end of the year.
Many expect the biggest impact of VAT to be felt by businesses, which will have to put new systems in place
Stevens said companies should employee accounting and IT staff with previous VAT experience to ensure their compliance.