Bahrain to Move Ahead with VAT Under GCC Plan

The Gulf Cooperation Council’s (GCC) plan to introduce a VAT system across all six member states – Bahrain, the Kingdom of Saudi Arabia, Kuwait, Oman, Qatar and the United Arab Emirates – received a much-needed boost in February when Bahrain’s Minister of Finance, Sheikh Ahmed bin Mohammed Al Khalifa, said his country plans to move ahead with the new tax. Speaking at an investment conference in Manama, Sheikh Ahmed said “we’ll be working with parliament on VAT and aim to have everything set up by the end of 2018,” although no firm date was given for when the tax would be launched, according to a Reuters report.

Bahrain was an early signatory to the Unified VAT Agreement the GCC unveiled in January 2017, and at the time was expected to implement in January 1, 2018. But the GCC’s road to unified VAT has been a bumpy one. Disputes between Qatar and Saudi Arabia (and other GCC countries) raised doubts about the future of the agreement last year. While Saudi Arabia and the UAE have now introduced the planned 5 percent sales tax, Kuwait and Oman have said they will delay implementation until 2019. Qatar has not yet implemented and local industry leaders do not expect to see a VAT anytime soon, according to a report from the Qatar Tribune.

Companies that are based in or do business in Kuwait, Oman, Bahrain or Qatar will be glad for the additional time to prepare for the new indirect tax regime, but the situation in the Gulf is clearly still in flux. We’ll keep you posted.