Gulf likely to delay VAT introduction

The imposition of value-added tax (VAT) in Gulf Co-operation Council (GCC) countries still seems some way off as there is no unanimity on the issue among member states, according to a top official.

“There is discrepancy in the points of view among GCC countries about the advantage of VAT. However, there is a general agreement that it is necessary to apply VAT in all GCC countries in case it is approved,” Mohammed bin Khalifa Fahad Al Muhairi, Director-General of the Federal Customs Authority (FCA), told Emirates Business. 

He said the approval process of VAT needs time. It is not decided whether VAT will be an alternative for customs duties or not.

“The FCA participates in meetings that discuss VAT at the local and GCC levels. But the main role is played by the Ministry of Finance as well as Dubai Customs. I think they have gone a long way in drawing up proposals related to VAT, mechanisms of its application and bodies assigned with its implementation,” said Al Muhairi.

“This [VAT] suggestion is still under discussion in meetings at local and GCC levels, so it is difficult to reveal details, especially as this will cause confusion within the country, the GCC and with our trading partners,” he added.

Also, disagreements among GCC member states over a monetary union could delay plans for the introduction of VAT in the region, according to an IMF official. Mohsin Khan, IMF director for Middle East and Central Asia, had earlier said any delay in achieving the GCC currency union will have an impact on the introduction of VAT.

Source : Emirates Business 24/7 - Dubai, Dubai, United Arab Emirates,  dated 04/03/2008