New VAT in GCC ushers in era of closer co-operation
The Gulf Cooperation Council countries will announce a unified value added tax (VAT) framework within 10 days and all six GCC nations plan simultaneous VAT adoption in January 2018. Gulf countries are expected to confirm domestic legislation shortly after the framework is released, and VAT is expected to generate $25bn in annual revenues for GCC countries.
Ayman Khaleq, Managing Partner of Morgan Lewis in Dubai, has the following comments on this development, which you are welcome to use:
"The new VAT framework and thereafter legislation, will have a multi-layered-supplemental effect beyond its economic effect. GCC member states will need to create bureaucracies to administer and enforce the implementation of the new tax, and businesses will have to gear up for such regulations, with accounting, tax and, of course, law firms needing to expand their service offering in areas relating to doing business in the GCC. We simply have to start to approach the market differently.
“The adoption by the GCC of the VAT platform aims at levelling the playing field amongst its member states; as a result, we have not heard from clients that the new tax will impact their decision to do business in, for example, the UAE because Bahrain or Qatar won't be offering better VAT tax treatment anyway.
“We hope that the inter-GCC cooperation on the VAT tax, will usher in an era of closer cooperation in which we see more of such regulations in areas relating to the marketing of securities amongst and into GCC countries."
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