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The unofficial English version of the GCC Unified Agreement on Value Added Tax (GCC UAVAT) has been released, following its publication in Arabic in the Saudi Official Gazette. The agreement outlines a unified framework for the implementation of VAT across all six GCC member states. However, details regarding free zones and the list of exempted food items are still to be finalized. The GCC UAVAT underscores the importance of promoting economic integration among member states by establishing a cohesive legal framework for VAT.
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Similar to global VAT frameworks, the GCC UAVAT outlines guidelines for long-term business contracts, addressing how VAT applies to both materials produced in the past and those to be produced in the future. While each GCC member state will implement its own VAT laws and regulations, the unified framework ensures consistency and alignment across the region.
Known as the “local law,” the GCC UAVAT is more harmonized than anticipated, emphasizing the importance of cooperation between GCC member states. It underscores the role of the “Common Customs Law” and the “Ministerial Committee”—specifically, the Financial and Economic Cooperation Committee of the GCC Member States. This committee oversees matters related to the implementation, registration, and modification of the agreement, with resolutions requiring approval from all member states. The agreement reflects a strong commitment to unity, consistency, and stability within the GCC.
The GCC UAVAT places a strong emphasis on embracing the digital era by implementing a seamless VAT system. To support this, each GCC Member State is required to establish an “Electronic Services System” to streamline the process. During her visit to the UAE in February, Christine Lagarde, Managing Director of the IMF, highlighted the importance of creating a user-friendly system for the success of the GCC UAVAT. The electronic platform must be robust, capable of generating accurate records for every transaction step.
GCC Member States will be responsible for defining tax periods, filing VAT returns, processing refunds, and handling payments—all of which can be managed online. They will also have the right to appeal tax rulings and make objections. Additionally, each member state will have jurisdiction over sectors such as education, healthcare, weather services, and real estate, with the exception of local transportation, which remains exempt. Further clarification on these regulations is still awaited.
