The Gulf Cooperation Council’s agreements covering unified selective and value added taxes have come into effect after ratification by the UAE.

State news agency WAM quoted the General Secretariat of the GCC as confirming the UAE was the second state to ratify the documents for the two agreements.

The secretariat went on to explain that the two agreements become effective when a second state submits the ratification documents.

“Hence, the GCC unified selective excise tax and the VAT agreements entered into force, the statement said”, according to WAM.

Most countries in the six nation bloc – comprising the UAE, Saudi Arabia, Qatar, Bahrain, Kuwait and Oman – are expected to implement the 5 per cent VAT for larger businesses from January 1 next year.

Implementation for smaller businesses will then follow.

Read: Saudi businesses with revenue exceeding SAR375,000 to pay VAT from Jan

However, despite just over six months until the tax comes into effect, many businesses have been found unprepared for its introduction.

Read: UAE businesses found unprepared for VAT introduction

The implementation of the selective tax and the products it will be applied to has been less clear.

Most states have specified that unhealthy goods like soft drinks and tobacco products will be targeted.

Read: UAE to implement soft drink, tobacco tax this year

Both measures are seen as an important new source of government revenue following the fall in oil prices.