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Saudi Arabia Steps Out Of Character For A Moment To Ask Its Public For VAT Feedback


In a first-of-its-kind move in the six-nation GCC, Saudi Arabia’s tax authority General Authority for Zakat and Tax (GAZT) has sought public feedback on the draft value added tax (VAT) law.

The move comes after the Kingdom confirmed imposition of 5% VAT from January 1, 2018, following the ratification of the VAT and Excise Tax treaty this month.

The purpose of the public consultation is to invite views on the proposed VAT law, GAZT said in a notice published on its website.

The consultation will provide significant value to the successful implementation of VAT, it said.

The last day for submitting feedback is June 29 as bylaws are expected to be drafted and approved in the third quarter 2017.

The consultation is an important opportunity for the public and business people to share feedback on the draft law for VAT, Tareq Al Sadhan, acting director general of GAZT, told a local news paper.

This is the first time a tax like this will be introduced in the GCC, he said. “Therefore, efforts are needed to understand the needs and perspectives of businesses to ensure they can be supported through the VAT implementation process.”

In March, UAE government’s Federal National Council (FNC) approved a draft law that requires business owners and landlords to pay a 5% VAT starting January 2018.

Now, UAE-based private businesses making Dhs370,000 and more a year will have to pay VAT.

Last year, the six Gulf Cooperation Council (GCC) countries, including the UAE, Saudi Arabia, Qatar, Bahrain and Oman, signed an agreement to implement a 5 % VAT, despite administrative and technical challenges.

However, economists and officials have previously opined that simultaneous introduction in all countries may not be feasible as creating the administrative infrastructure to collect the tax remains a challenge.

It is also difficult to train companies to comply with the news tax in a region where taxation is minimal.

Now GCC governments are planning for early, simultaneous adoption, said Younis al-Khouri, under-secretary at the UAE finance ministry.

By January 1 2018, 5% VAT will be adopted across the GCC.



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