Inter-GCC imports temporarily taxed at 0% for UAE, Saudi companies

Saudi Arabia’s General Authority of Zakat and Tax has said that imports within the Gulf Cooperation Council region will temporarily be zero-rated as countries prepares to implement value added tax.

Under a regional agreement all six members of the GCC – Bahain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – are required to implement a 5 per cent VAT rate over the next year.

So far only Saudi Arabia and the UAE have implemented the tax and Oman said last month it would introduce it in 2019. A timeline for Bahrain, Kuwait and Qatar has yet to be announced, meaning no definitive date is in place for the taxation of regional imports.

Read: Oman postpones VAT introduction until 2019

The General Authority of Zakat and Tax said on Thursday that exports outside of the kingdom, including those to other GCC countries, would be zero-rated and the issuing company could recover the tax paid through their filings.

In order to do so, evidence must be presented within 90 days of the data of the supply of the goods.

If the person or company submits no evidence that the goods were transferred outside of the country within 90 days they will not be able to claim back the tax.

“The authority explained that as a transitional phase, inter-GCC imports will be taxed at 0 per cent, so that the value added tax will be applied in the rest of the GCC countries and the electronic link between them will be established,” Saudi state news agency SPA reported.

Companies are required to present documents officially clearing exports on behalf of the supplier in addition to information on the identity of the customer and the final delivery location.

Saudi Customs has the power to refuse documents that do not constitute sufficient evidence of goods being transferred outside of the kingdom.

Saudi Arabia is expecting to raise $9.3bn from VAT in its first year.

Read: Saudi expects $9.3bn from VAT in 2018