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The GCC states agreed to a broad framework for the introduction of VAT in early 2017. The framework agreement sets out the underlying principles of VAT laws for the six GCC countries, although there are areas where member states will have some flexibility.

To date we have seen the intorduction of VAT in both the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) effective 1 January 2018.

While VAT is not intended to be a tax on business, collecting the tax and remitting it to the government will have significant compliance costs. There could also be cash flow implications. Supply chains need to be reviewed to understand the impact of VAT. VAT costs and accounting obligations will need to be identified so they can be addressed. There are also implications for IT systems. Adapting to VAT will mean updating or upgrading ERP and IT systems and interfaces to correctly capture input and output VAT. Governance frameworks will also need to be reviewed and updated to ensure policies, processes and controls comply - a continue to comply - with VAT legislation.  

How to prepare

VAT rules can be complex and the implications are not always considered. Implementation of VAT needs careful planning for its success.

Our dedicated VAT team will help you consider every stage of the implementation process and beyond.

Our experienced VAT team in the Lower Gulf, along with international VAT experts across the KPMG global network have been advising and implementing strategies to help organizations comply with their VAT obligations and reduce VAT liabilities and particularly for clients without full VAT recovery.

How does VAT work

Capabilities and solutions