Cooperation Council (GCC) is a new entry this year
A new entrant for this year is the Gulf Cooperation Council
(GCC), which is changing the tax landscape of the Middle East
The council is made up of six member states, namely the
United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar, and
Kuwait. It was established in 1981 to join the six states in a
framework fostering effective coordination, integration and
inter-connection in all fields in order to achieve unity,
according to Article 4 of the GCC Charter.
In 2016, the member states finally agreed to introduce a VAT
regime to plug revenue gaps created from the fall in oil
prices. Over the year, a multilateral agreement was concluded
in principle to implement VAT, and each country has worked
towards developing the structure, compliance requirements and
rates of the new VAT regime. This big change has put the GCC
firmly on the tax map and in this year's Global Tax 50. But
this is only the beginning. Businesses worldwide are paying
attention to what is happening as this VAT regime may be the
first of several tax regimes that could be introduced in the
region over the coming years to sustain tax revenues.
So far this year, all six member states have committed to
introducing VAT from January 1 2018, at a rate of 5%. All
member states will have a VAT by the beginning of 2019 and
companies are gearing up for the change.
The progressive implementation of VAT throughout the GCC
from January 1 2018 marks the "start of some of the most
exciting, dramatic and far-reaching socioeconomic changes in
the region since the discovery of oil reserves in commercial
quantities during the 1960s", said Justin Whitehouse, Deloitte
Middle East indirect tax leader.