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value added tax (VAT) at a rate of five per cent in !"#, though the decision is yet to receive
final approval before being implemented, according to a top $mani official%
&ar'ish Al eloushi, $mans *inister of +inancial Affairs, said that GCC countries had already
reached a decision on the five per cent rate after negotiating on a rate bet'een three and
five per cent%
A spoesman from the -A.s *inistry of +inance had earlier said GCC countries are yet to
finalise their implementation policy, but they have agreed that the tax 'ill not be applied on
certain industries lie education, and health care% /taple food items 'ould also be exempted
from VAT%
The tentative policy for the tax implementation has already been approved by leaders of the
GCC countries, 0ounis Al 1houri, undersecretary at the -A.s *inistry of +inance had said
earlier%
2e pointed that the -A. is expected to generate up to 34%5 billion as a result of introducing
VAT
VAT in the first year of implementation alone%
6t may be noted that VAT has been adopted by "7! countries and contribute ! per cent of
'orld8'ide tax revenues% The average standard rate in .- countries (excluding ne' members)
is almost ! per cent, 'here its revenues are 5%7 per cent of G&9%
6f the current oil prices remain, oil and gas revenue in the GCC 'ill fall significantly or even
disappear
disappear%% The non8oil public revenue
revenue 'ould be far from sufficient
sufficient to cover public spending,
especially as public spending rises 'ith respect to the G&9% This can push these economies to
run into ma:or fiscal difficulties%
As such the GCC might need to tae ma:or steps on taxation including that of introducing a
value added tax 'ith a uniform rate%