VAT Rates in GCC: Benefits for Businesses

With the commencement of Value-Added Tax (VAT), the Gulf Cooperation Council (GCC) nations have reached an essential phase in their economic growth. This blog explains the VAT rates in the GCC, with a focus on the United Arab Emirates (UAE), Saudi Arabia, Bahrain, and the Sultanate of Oman. We urge you to learn more about the advantages of implementing VAT and how Carvy Consultants can be your dependable guide as you handle the complex VAT landscape.

A significant turning point in the GCC nations’ economic progress was the implementation of VAT. Numerous advantages have resulted from the establishment of the VAT, including higher income generation, improved fiscal stability, and more corporate transparency.

Each GCC member state has implemented VAT in a unique manner, with a few minor differences in rates and rules. Let’s examine the VAT rates in the GCC nations in more detail:

  1. United Arab Emirates (UAE)

On January 1, 2018, the UAE began collecting VAT at a regular rate of 5%. There are several industries like healthcare, education which are either zero-rated or VAT-exempt. The current voluntary registration limit is AED 187,500, while the current mandatory VAT registration maximum is AED 375,000.

  1. Saudi Arabia

Saudi Arabia implemented a 15% VAT rate starting in 2023.  A person must register for VAT if their total taxable supplies over the course of a year exceed SAR 375,000. The Saudi government’s goals to enhance income and lessen reliance on oil include raising the VAT rate.

  1. Bahrain

Bahrain began implementing VAT in 2019 at a standard rate of 10%. To be eligible for VAT registration, a business must meet certain criteria, such as generating annual sales that exceed the necessary level of BHD 37,500.

  1. Sultanate of Oman

On January 1, 2021, the Sultanate of Oman implemented VAT at a standard rate of 5%. In Oman, the Ministry of Finance is the appropriate administrative and enforcing body for the VAT. In Oman, 5% standard VAT is charged on the provision of goods and services. Businesses in Oman must have turn over more than OMR 38,500 in order to be qualified for VAT registration.

Benefits of VAT Implementation

The GCC countries have benefited greatly from the imposition of VAT. Among the main advantages are:

  • A. Higher Revenue

The introduction of VAT has assisted GCC nations in diversifying their income sources, lowering reliance on oil revenues, and fostering long-term economic stability.

  • B. Economic Progress

Businesses are encouraged by VAT to keep accurate financial records, use contemporary accounting procedures, and put in place effective supply chain management systems. This encourages openness and responsibility, which ultimately supports economic progress.

  • C. Regional connectivity

Enhanced coordination and cooperation among the GCC member nations have been made possible by the implementation of VAT, promoting regional economic integration.

Carvy Consultants to Assist!

Carvy Consultants could prove very beneficial in guiding businesses through the VAT system due to its expertise in tax advising and financial services. Our team of knowledgeable experts can offer thorough advice on VAT consultancy services, ensuring that companies adhere to all legal requirements and stay clear of any fines. We can help with VAT return filing, VAT implementation, and VAT registration.

Contact us right now to get started on the path to financial efficiency and peace of mind.