DOHA: GCC states are taking a closer look at the possibility of introducing value-added tax (VAT) on commodities and services. VAT is like sales tax and is also known as goods and services tax.
Kuwait News Agency (KUNA) reports that the GCC countries have in principle agreed to formulate a general framework to impose VAT. A meeting of undersecretaries of the Ministries of Finance of the GCC states was held in Doha.
On its sidelines, Kuwait’s Undersecretary of Finance Ministry, Khalifa Hamada told Kuna that a working team, in collaboration with a legal team, has been assigned to prepare the framework for introducing VAT in GCC states.
The framework, in the form of a proposal, will be submitted to the Ministers of Finance of the GCC states at their meeting slated to be held here in May for their perusal. Qatar News Agency (QNA) reported that the meeting of the Undersecretaries of the Finance Ministries was chaired by H E Khaled bin Hamad Al Mannai, Undersecretary at Qatar’s Finance Ministry.
Arabic daily Al Arab confirmed in a report published yesterday that the 46th meet of the Undersecretaries held here discussed “the importance of VAT”.
The ministerial meeting due in May will also discuss issues like financial coordination among the GCC states and labor market reforms and increasing labor force, the daily said.
UAE-based alkhaleej.ae, meanwhile, said that the UAE was looking at the possibility of introducing VAT of three to five percent on goods and services “along with other GCC states”.
Yunus Khouri, Undersecretary at the UAE’s finance ministry, was quoted by alkhaleej.ae as saying that the GCC states were working to have a unified mechanism for an indirect taxation system.
Khouri, though, didn’t specifically name VAT, but it is like sales tax and an indirect tax on consumers.
No member-country of the GCC can take a decision to introduce VAT on its own.
Any decision regarding VAT must be taken at the GCC level, alkhaleej.ae said quoting experts.
Alkhaleej.ae said, quoting experts, that the idea behind VAT is to discourage rising consumerism in GCC societies and generate added revenues for the governments so they could make more outlays for development spending.
“The levy (VAT) will have a negative impact on the GCC states,” one expert said.
Some others said they didn’t agree with this view and pointed out that the percentage of taxation was, after all, small.
But commenting on the website (of alkhaleej.ae) some UAE-based businessmen said they were opposed to the idea since the UAE, in particular, was known for attracting huge inflows of foreign investment and that will be affected by VAT.
The Peninsula
