VAT Is Coming to the

Gulf Countries and May Be Recoverable

Faced with falling oil revenues and rising public spending, the Gulf Cooperation Council decided to introduce value added tax across its six member states: Saudi Arabia, Bahrain, the United Arab Emirates, Kuwait, Oman and Qatar.

In this article:

Looking for indirect Tax Advice?

Faced with falling oil revenues and rising public spending, the Gulf Cooperation Council decided to introduce value added tax across its six member states: Saudi Arabia, Bahrain, the United Arab Emirates, Kuwait, Oman and Qatar.

What Businesses Need to Know

  • New tax authorities have been created in each country to manage VAT compliance.
  • Companies exceeding certain annual revenue thresholds must register for VAT and submit returns.
  • All financial transactions must be carefully recorded and documented.
  • Penalties apply for failing to register or comply with VAT obligations.
  • VAT returns must be filed electronically with the local tax authority.

Recovering VAT

Foreign companies may be able to recover VAT paid in Saudi Arabia and the UAE on certain business expenses such as hotels, trade fairs, conferences and training.

Rules for recovering expenses like meals and entertainment are still being clarified.

To qualify for a refund, companies generally must:

  • Be registered for VAT in their home country

  • Provide original invoices

  • Meet a minimum annual VAT amount (around AED 2000 or SAR 2000, roughly โ‚ฌ450)

  • File refund applications online by the required deadline, often June 30 of the year following the expenses

After verification, tax authorities aim to issue refunds directly to the company’s bank account within about 60 days.

Whatโ€™s Next in the Gulf?

Bahrain has announced a 5 percent VAT starting January 1, 2019. Kuwait planned to introduce VAT in 2021. The situation in Qatar remains uncertain due to ongoing political tensions in the region.

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