GCC Value-Added Tax (VAT): Analysis of the GCC VAT Framework Agreement

GCC Value-Added Tax (VAT)

Following the recent release of the unified agreement for VAT in the Gulf Cooperation Council (GCC) countries by Kingdom of Saudi Arabia, KPMG is pleased to present you with ‘GCC Value-Added Tax (VAT): Analysis of the GCC VAT Framework Agreement’, a comprehensive publication providing a summary of the key information mentioned in the framework agreement that you should be aware of. It also features key steps that businesses should be taking today to be VAT ready by 2018.


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GCC VAT brochure

The Gulf region (including the Kingdom of Bahrain), has long been considered an attractive and low-tax environment. However, to keep up
with the changing economic landscape and as part of wider development reforms, the Gulf Cooperation Council (GCC) member states signed a framework agreement to introduce Value-Added Tax (VAT) on the supply of goods and services at a standard rate of 5%, in 2018.

Implementing VAT will have implications for businesses and new taxpayers, both in Bahrain and abroad, directly and/or indirectly. However, a broad-based VAT at a low rate is unlikely to deter investment into Bahrain, or the
surrounding region, whose appeal stretches much further than its low-tax status. Infrastructure development, access to high-potential growth markets in Africa and Asia, free-trade zones, competitive labor costs, few trade barriers and economic and political stability are all factors which add to the region’s appeal. In addition, VAT will have a neutral impact on registered businesses when managed efficiently.

In this publication, KPMG examines the Unified Agreement for VAT of the Cooperation Council for the Arab States of the Gulf, the GCC VAT Framework Agreement, and analyzes the implications on businesses across the main
economic sectors. We also outline practical steps businesses can take today, to be VAT ready and minimize as well as optimize the impact of VAT on their operations.

©2021 KPMG Fakhro, a Bahrain partnership registered with Ministry of Industry, Commerce and Tourism (MOICT), Kingdom of Bahrain and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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