GCC countries to announce VAT framework within 10 days

The Gulf Cooperation Council countries will announce a unified value added tax (VAT) framework within 10 days, according to reports.

Times of Oman cited Alkesh Joshi, director of tax at professional services firm EY, as confirming the timeline for the 5 per cent tax, which will come into effect from next year.

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

He said the system would replicate a European Union style common market framework and specify which items and services will be affected.

The Gulf countries are expected to follow 80 per cent of the agreed legislation with the remaining 20 per cent subject to their discretion.

Oman will announce domestic VAT legislation within the 10-day period and the tax is expected to contribute 1.4 per cent of GDP or $1.1bn each year, according to the publication.

In the neighbouring United Arab Emirates the government is expected $3.3bn from the tax in the first year, or 0.9 per cent of GDP.

Read: VAT to generate $25bn in annual revenues for GCC countries

The UAE previously announced that a number of essential food items, education, healthcare and other products would be exempt from VAT.

EY urged companies to begin their preparation for the introduction of the tax after conducting a VAT readiness survey that revealed 50 per cent of companies in the GCC had done nothing to prepare.

The introduction of the tax is expected to create particular demand for consultancy, advisory, legal and strategic tax professionals in the Gulf this year.

Read: Introduction of VAT ‘biggest’ driver for job creation in the UAE – report