Preparing for the Introduction of VAT in the Gulf States

Matt Walsh
September 12, 2016

With a new Value Added Tax (VAT) system expected to be introduced in the Gulf Cooperation Council (GCC) countries beginning January 1, 2018, businesses need to start planning and preparing to comply with the new tax regime.

The GCC countries include Saudi Arabia, Bahrain, Oman, Qatar, Kuwait, and the United Arab Emirates.

Sovos Compliance was in Dubai, UAE on August 30 and 31, sponsoring and attending the GCC VAT Forum, hosted by the International Quality and Productivity Center (IQPC). The forum attracted a mix of tax industry professionals, including the Sovos team and attendees from the Gulf region business community.

Multiple sessions over the two days were geared toward providing a general framework on how VAT operates, including:

  • Steps businesses need to take now to start getting ready
  • How to staff a team to manage VAT compliance
  • Discussions on managing compliance both administratively and with automated systems

As the Gulf region has not had a VAT or similar indirect tax system in place previously, the attendees were looking to acquire an understanding of how a VAT system operates, as well as information on best practices in managing the roll out and the ongoing compliance once the tax regime is established.

To date very little information has been released by the governments on specifics of the new tax system, though there is an expectation that more detailed information will be released in October. There is concern that with January 1, 2018, quickly approaching there won’t be enough time for the business community to implement the new regime within their financial systems. Timing and efforts to comply were a large part of the discussions occurring outside the formal sessions.

The three main points we took away from the event are:

  • Businesses are gearing up to implement new systems, but with little information as to specifics, so they are looking at other VAT systems for guidance on how to begin analyzing their businesses.
  • Many businesses and tax industry professionals are concerned that the January 1, 2018, implementation date will force both business and governments to rush to implement the new systems in a short amount of time.
  • There is a great need for VAT information and training for the business community that has not had to manage such a system before in these countries.

There is concern that with VAT expected to be introduced in the GCC on January 1, 2018, there won’t be enough time for the business community to implement the new regime within their financial systems.

Sovos suggests businesses that will be affected by this new tax system should be reviewing their accounting and financial systems to understand what information and data they currently use and have available. Then, using other VAT systems as a guide, ensure they have access to important data elements such as sufficient detailed product/service categories, location information, and price details.

This event was just the beginning of providing information and education regarding this new tax regime.

Sovos Compliance will keep the tax and business communities up to date as the new rules are released and evolve over time.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.


Matt Walsh

Matt Walsh is the Principal of Indirect Tax. Matt and his department ensure all Sovos tax and reporting solutions are compliant with global indirect tax laws. He also provides strategic direction, guidance and recommendations for product enhancements and development. Matt is focused on fostering and managing government and industry relationships and has over 17 years of experience in compliance, including starting as a tax counsel in the tax department and then advancing from Manager to Director of Tax Research and from there to Senior Director of Tax to his present position. Prior to his time at Sovos, Matt was a Team Manager at John Hancock Financial Services. He is currently a member of the Technical Advisory Group of the OECD (Working Party #9), which drafts model legislation and implementation guidelines for the taxation of cross-border services. Matt has a B.S. in Business Administration from the Massachusetts College of Liberal Arts (formerly North Adams State College) and a J.D. from the New England School of Law.
Share This Post

North America Tax Information Reporting
June 7, 2023
4 Ways to Elevate Your Direct State Reporting Process

Direct state reporting obligations have gotten increasingly difficult for some businesses over the past few years. With more states requiring direct reporting of form series 1099, more companies are subject to penalties if they do not comply with those obligations. As state reporting evolves, ensuring your process is efficient is critical. Strengthening your reporting process […]

EMEA VAT & Fiscal Reporting
June 7, 2023
The Value of SAP S/4HANA Add-On Software Certification

Many companies utilise SAP for their tax processes, but limitations in native software functionality add a layer of complexity. Custom coding is often required for businesses to achieve their desired results, producing the need for ongoing customisation and optimisation – this creates a hefty burden for companies, in addition to their tax compliance obligations. SAP-certified […]

North America Sales & Use Tax
June 5, 2023
Sovos Onboarding: 6 Departments Dedicated to Customer Success

If you are evaluating Sovos, we want you to understand expectations for the customer experience and what teams are there to support you. At Sovos, we have a range of teams ready to support you from the day you sign a contract. Whether it be a customer success representative to review the value you are […]

North America Sales & Use Tax
June 1, 2023
3 Things to Remember if You Get a Sales Tax Notice

Have you ever received a sales tax notice from a state department of revenue? Whether you answered yes or no, there are important things to keep top of mind to help keep your business prepared. Finding out that you have failed to comply with one or more of your sales tax obligations can be startling. […]

EMEA VAT & Fiscal Reporting
May 31, 2023
Bizkaia: What is Batuz LROE?

The Ledger of Economic Operations (Libro Registro de Operaciones Económicas), also known as LROE, is a main compliance element of the Batuz tax control system. This system is under implementation in the province of Bizkaia, located in the autonomous Basque community in Spain. Taxpayers under the Batuz mandate must comply with both TicketBAI and LROE […]