Starting 2018, Saudi arabia and the rest of the GCC will implement Value Added Tax (VAT). The GCC has agreed to implement the VAT to help cope with the collapse of global oil prices. The GCC countries are heavily reliant on oil revenues, and since the massive drop in oil prices, the region is facing huge budget deficit. In order to reduce the budget deficit, 5 % VAT will be applied on the sales of goods & services in the region. Although, the sectors such as food, health and education will be exempted.
The Saudi Press agency said that the Cabinet “decided to approve the Unified Agreement for Value Added Tax” to be implemented throughout the six-member Gulf Cooperation Council (GCC. The move is in line with an International Monetary Fund recommendation for Gulf states to impose revenue-raising measures including excise and value added taxes to help their adjustment to lower crude oil prices which have slowed regional growth.
The GCC countries have already agreed to implement selective taxes on tobacco, and soft and energy drinks this year.
Due to its complexity and the broad lack of understanding, we can provide consulting and advisory in VAT implementation. this will typically involve training the teams, updating accounting systems, and producing reports for compliance and submission to authorities