By Khaled Al-Mutairi
KUWAIT, Dec 31 (KUNA) -- The Unified Agreement for value-added tax (VAT) for the GCC region will officially come into effect January 1, 2018, with Saudi Arabia and the United Arab Emirates announcing actual implementation.
VAT across the GCC (Gulf Cooperation Council), will provide the framework for the operation of VAT across the GCC. Each GCC member state will implement the framework through legislation and other instruments.
The remaining GCC countries; Kuwait, Bahrain, Qatar and Oman, decided to delay introducing VAT until later in 2018 and 2019.
The Kuwaiti Ministry of Finance, in a previous statement, said approving VAT is up for the National Assembly (parliament) to endorse in accordance to sound constitutional procedures.
The GCC VAT will be discussed by concerned parliamentary committees, which in turn, will forward their reports to the Assembly for ratification, noted the statement.
The VAT will apply to goods and services at the standard rate of five percent. Most VAT compliance requirements and procedures are left to the discretion of each GCC Member State under each's local legislation.
Also, the VAT treatment of some sectors, namely, education, healthcare, real estate and local transport is left to the discretion of each member state.
Food products shall be subject to the standard rate of VAT, however each member state will have the right to apply zero rate on food as per the unified list of commodities, and the same goes for medical equipment and medicines.
Oil and gas, including oil derivatives sector may be subject to VAT at a standard rate or zero rate, at the discretion of each member state and in accordance with the modalities and conditions, they each set out.
Businesses shall take into consideration the VAT impact on the their transactions now and starting to plan how to have the right VAT technical, systems, financial, tax governance and compliance, training and other areas in order to comply with the VAT requirements. (end) km.hb