Value added tax (VAT) is due to be implemented in the Middle East from 2018. Clients with operations in the Gulf Cooperation Council (GCC) countries including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia (KSA) and United Arab Emirates (UAE) will be impacted; this is a fundamental change to business operations in a region with little history of taxation. Earlier in 2017, the regional VAT Agreement was signed by all of the six GCC countries. The next step will be the agreement of local implementation laws in each country. At the time of issue, KSA and the UAE have become the only countries to publish a finalized domestic law (Deloitte, 2017).  As Deloitte stated, globally there is a trend that governments seek to incorporate specific rules targeting telecommunication and electronically provided services and the consumption of end customers.  Gurrib (2017) was the first study to assess the impact of potential VAT revenues onto the UAE.  Several scenarios are analyzed, including a constant 5% VAT for 2018–2022; increasing it by 2.39% yearly; increasing it to reach the maximum 2014 country tax rate of 27%; or increasing it to reach an average tax rate of 19.1%. The collection efficiency values of 0.4–0.7 result in a 2018–22 tax revenue to GDP range of between 1.7% and 8%.  

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Deloitte (2017). Value Added Tax in the GCC, Insights by Industry. Volume 3. https://www2.deloitte.com/content/dam/Deloitte/xe/Documents/tax/whitepaper/whitepaperv3/dme_tax_vat-whitepaper-v3.pdf

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Ikhlaas Gurrib (2017) An assessment of the potential VAT revenue collection for the United Arab Emirates, Macroeconomics and Finance in Emerging Market Economies, 10:3, 306-321, DOI: 10.1080/17520843.2017.1321028

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