The treaty is sometimes called a framework agreement, and it is a good name, it defines the “wire framework” for a collaborative VAT system between gcc countries. It should be remembered, however, that this is a treaty and not a law and is therefore essentially an agreement between countries. It is not a document that taxpayers can count on per se – you have to look at local implementing laws to develop the exact mechanics of VAT in each country. At the time of the letter, only the Saudi draft of the VAT Act (which is itself essentially a framework document in which it is not rated at zero or exempt from the contract) is available, but details are emerging. In the meantime, the treaty provides important guidance on how we can expect the VAT system to work. Countries also enjoy great flexibility in the treatment of certain other important sectors – government agencies, event organisers (under international agreements), farmers and fishermen who are not registered for VAT and citizens who build their homes. Countries have flexibility in applying VAT to these groups – they can either refund VAT or exclude them from paying taxes on deliveries delivered to them. The United Arab Emirates has confirmed that it will only accept refunds, and only in the case of certain public bodies, qualified event organizers and citizens who build their own homes. However, deliveries to these agencies in the United Arab Emirates are taxed in accordance with normal VAT rules and VAT is payable. It is not clear what other countries will do, but there is a possibility of differential processing of deliveries to these facilities, which are entirely based on the status of the recipient – it is potentially quite complex. The VAT agreements concluded under the GCC VAT agreement and excise duties are the basis of each country`s individual VAT and excise scheme. Each Member State adopts its own national VAT legislation, using agreed-upon principles as guidelines.
A frequently asked question is whether the GCC VAT system is based on the European Union model or on more modern systems in new COUNTRIES applying VAT (for example. B, Singapore or New Zealand). Well, we must first consider the comparisons, and the only comparison with a transnational VAT system is the EU. That is why it has similarities with the EU VAT system. The similarities with the EU are mainly related to intra-CCG (and certain services) trade between businesses (B2B) and private consumers. The remote sales provisions apply, so that a person who delivers goods to another country via the VAT registration threshold must register there. If you are familiar with the EU VAT system, the possibility of not collecting VAT on many B2B deliveries for which your customer is subject to VAT becomes very familiar in another GCC country. An august 2018 article in the U.S. daily Khaleej Times, the launch date was scheduled for January 2019.
This was confirmed later when the Bahraini Parliament approved the VAT agreement in January 2019. The Single Agreement on VAT (VAT) of the Cooperation Council for Gulf Arab StatesThe Cooperation Council`s single VAT agreement for gulf Arab States was published by UM AL-QURA, number 4667, H1438/7/24.