The Introduction Of VAT In The GCC Countries

Our experts are always there to make things easier for you. Here are some blogs that can help you in understanding the VAT registration process in UAE.

By Julia | November 11th, 2017 | VAT

0

The Introduction Of VAT In The GCC Countries

The Gulf Cooperation Council (GCC) member states have unanimously agreed upon to introduce VAT framework across the gulf region. The framework agreement has emphasized on the specific guidelines of VAT laws for the six GCC countries, with the possibility that the member-states will experience some exemptions to define their own needs. The proposed date of the integration of VAT across the GCC is January 1, 2018.Vat applies to the distribution of products and services. Organizations selling different products or providing services that fall under the tax framework are usually needed to register for VAT to collect it on a timely basis. Several companies, however, can be excluded from being liable to charge VAT.

  • The standard charge for VAT in every GCC member-state has been allotted to be 5% for generic goods.
  • Specific products and services may be subject to the tax at a different and particular rate, special-rated supplies which have not been defined yet.
  • Additionally, there will be particular products or services that are liable to VAT at the rate of 0%, which will be zero-rated supplies
  • And some other services may also be excluded altogether from the VAT.

Services and products that have been imported into a territory are normally liable to VAT at the moment of importation. When it comes to such imported goods, VAT is often collected by the Customs authority during the time of the shipment release. Typically, VAT on imported goods is adopted on landed cost, which is included within the customs duty.

It is natural that only the businesses that have registered for VAT will charge and collect VAT on the distribution of taxable services and products, which is also popularly known as ‘output VAT’. Organizations are eligible for a refund for any VAT paid on the taxable services and products acquired by the organization, which will fall under the category of Input VAT.

Standard-Rated Supplies

Majority of the locally-sourced supplies of services and products in a GCC territory are normally incorporated in this division, for instance, retail and wholesale sales, the consumption of food in hotels and restaurants, and the provision of services by accounting and law firms.

Zero-Rated Supplies

Products that are exported out of a Gulf territory may be considered zero-rated, which means the products will be liable to VAT at a rate of 0%.

VAT-Exempt Services

Listed below are some services that may be excluded from VAT to decrease its impact on the vast majority of population –

  • Educational institutions
  • Pharmaceutical products
  • Financial services, which involves both life insurance organizations and banks
  • Lease or sale of residential areas.

Out-of-Scope Services

Supplies where services and products are offered by any overseas dealer or supplier to another overseas organization, then the supplies will belong to this category as do non-business and private transactions.

VAT Returns and Payments

VAT registered organizations are required to present intermittent returns to their respective tax authority briefly describing different divisions of taxable supplies subject to input and output VAT and the net price to be paid or claimed as a refund or carried ahead to be claimed in case of future VAT liability.

The interval of the tax returns can be quarterly, monthly, bi-annually or even annually, based on the magnitude of the output and input VAT amounts.

Uaevatexpert.ae offers thoroughly professional VAT consultation to ensure the seamless growth of your business

Uaevatexpert.ae has employed tax professionals with necessary competence and expertise to support organizations and businesses in preparing for the implementation of VAT system from the standpoint of compliance, consulting and technology.

Indirect tax professionals are capable enough to aid the clients with queries connected to the upcoming developments, including, but not restricted to, taxability reviews, nexus studies, supply chain research and evaluation of compliance requirements. Our experts can support consumers with the entire procedure of registering and filing for the VAT returns. They can efficiently guide the integration of automated solutions to the process of transaction tax compliance.

Leave a Reply

Your email address will not be published. Required fields are marked *

Still Not Ready for the 2018 VAT?

Keep Your Business Updated with Us!