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Gulf Cooperation Council (GCC) states are expected to generate $25 billion in revenues, Ernst & Young (EY) said in a recent report.
The six member states are planning to implement the new VAT by Jan. 1, 2018 to avoid transaction and sales issues relevant to intra-GCC trade.
The new system will allow companies to amend the tax policy, other fees and charges, in addition to boosting infrastructure investments.
Businesses that are not ready to apply VAT by that date may be negatively affected by the inability to pass on VAT to end customers. All GCC countries are expected to have implemented VAT by the end of 2018.
“A ‘wait and see’ position to plan for VAT is deferring the inevitable. Businesses that use the available time productively will ultimately be in a better position to comply with the new regime,” EY said in the report.
Gulf countries had earlier agreed to introduce a five percent VAT early 2018, according to Argaam data.
The tax system will be applied on a wide range of goods and services, excluding basic food items, healthcare, and education sector.
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