Unified Gcc Vat Agreement

Single Agreement on Value Added Tax (VAT) of the Cooperation Council for the Arab States of the GulfThe Single Agreement on VAT of the Cooperation Council for the Arab States of the Gulf was published by UM AL-QURA in its number 4667 of H1438/7/24. This agreement aims to define the single legal framework for the introduction of VAT in the GCC countries, which applies to the supply of goods and services. The Kingdom`s agreement was given by Royal Decree (point m/51 of H3/5/1438). There is also considerable flexibility granted to countries in dealing with some other important sectors: government agencies, protest companies (under international agreements), farmers and fishermen who are not registered for VAT, as well as citizens who build their homes. Countries have flexibility in applying VAT to these groups – they can either refund VAT to them or exclude them from paying tax on deliveries to them. The UAE has confirmed that it will only allow refunds and only in the case of certain government agencies, qualified protest companies and citizens who build their own homes. However, supplies to these companies in the United Arab Emirates are taxed in accordance with normal VAT rules and VAT is chargeable. What other countries are going to do is not clear, but there is a possibility of different treatment of deliveries to these companies, based solely on the status of the recipient – this is perhaps quite complex. The treaty is sometimes referred to as a framework agreement, and that`s a good name – it defines the “wireframe” of a collaborative VAT system between GCC countries. It should be remembered, however, that this is a treaty and not a law, and is therefore essentially an agreement between countries. It`s not a document taxpayers can rely on per se – one has to comply with local implementing laws to find the exact mechanics of VAT in each country…