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VAT Unified Framework Agreement

VAT Unified Framework Agreement

The Unified Agreement for Value Added Tax (VAT) of the Cooperation Council for the Arab States of the Gulf.


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The Kingdom of Saudi Arabia released the Unified Agreement for VAT in the Gulf Cooperation Council (GCC) in April 2017, setting out the principles under which the new tax system will be implemented in each of the GCC member states.

The text of the framework agreement has been published only in Arabic. However, for ease of reference, KPMG is pleased to present you with an English version of the framework agreement text, which has been translated directly from the original Arabic document.

Key points from the GCC VAT framework agreement

  • VAT is a tax on the consumption of goods and services. It is charged and collected by a taxable person and remitted to the tax authority.
  • 5% VAT will be charged on the supply of goods and services, unless zero-rated or VAT exempt.
  • Member states can choose to zero-rate or exempt the following sectors: education, medical, real estate and local transport.
  • A taxable person will be required to register for VAT purposes if the annual value of supplies, exceeds, or is expected to exceed, the mandatory registered threshold of USD 100,000. 

Each GCC member state (including Bahrain and Qatar) will now need to issue its’ own domestic legislation to locally implement VAT by 2018.

© 2020 KPMG Fakhro, a Bahrain partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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