VAT still on GCC agenda, say experts

Value-added tax (VAT) is very much on the agenda of GCC countries and might be introduced in the next few years, according to a report in a Qatari daily, quoting officials from tax consultancy KPMG, which was among the participants in an ongoing regional tax conference in Doha.

“It [VAT] is on the agenda and has been discussed at high level within the GCC. I would suspect in a not too distant future, maybe as earlier as the year 2013, we may see VAT implemented regionally,” The Pensinsula quoted Mark Rebello, Director of International Corporate Tax at KPMG in Qatar.

He added that the introduction of VAT is part of a strategy for Qatar and also the Gulf to adopt worldwide best tax practice and “VAT certainly has that ability to do so,” he said.

“I would say between two to five years, you would see VAT being introduced in this part of the world,” Jamal Fakhro, Managing Partner at KPMG in Bahrain and Qatar, said in remarks to the daily.

Fakhro however pointed out that the implementation of VAT would not be without issues. “It will not be an easy decision,” he said, referring to the direct impact it would have on the people.

He noted that some preparations are being undertaken by GCC governments to introduce the VAT system, but that laws to this effect have yet to be issued. “There are a number of studies and reviews being conducted now in a number of GCC countries. Certain governments went even a step ahead and established directorates which will look after the tax, but VAT is coming in the next few years,” he said.

“I do expect the VAT will be at a lower rate of maybe 5-7 per cent and the same rate will perhaps apply in every single country of the GCC.