VAT will provide a new revenue stream for GCC Governments to invest in high-quality public services and economic diversification initiatives to transition their economies away from a reliance on hydrocarbons.
As a general consumption tax, VAT applies to transactions in goods and services, unless specifically exempt. For example, the export of goods outside of the GCC is subject to a zero rate of VAT.
VAT is charged at each step of the supply chain. End consumers generally bear the cost of VAT, while registered businesses collect and account for the tax on behalf of the relevant national Government.
Implications for Victoria include:
- Victorian companies with a presence in Saudi Arabia and/or the UAE must comply with the new VAT requirements, ensuring that they correctly charge, collect and pay VAT on their sales and calculate VAT refunds on their own purchases.
- Victorian companies procuring goods and services from the UAE and Saudi Arabia may find VAT increases supply chain costs.
- Victorians visiting Saudi Arabia or the UAE will pay VAT on many goods and services, which may increase the cost of transport, accommodation and food.
- There may be opportunities for Victorian companies to provide goods and services to assist GCC companies to plan for and manage their responsibilities under the relevant national VAT schemes.
The Saudi Arabian and UAE Governments continue to release information to assist companies to understand and comply with relevant VAT laws and regulations, including:
- UAE Government overview of VAT, including links to key government agencies.
- UAE Tax Authority’s Explaining VAT
- UAE Ministry of Finance VAT Frequently Asked Questions – updated on a rolling basis
- Saudi Arabia’s General Authority on Tax and Zakat VAT website (English)
- Saudi Arabia VAT manual (PDF download)
- Non-government resources include All your VAT questions answered and Everything you need to know about VAT in the UAE
Summer 2018 Update
The diplomatic standoff between Qatar and a coalition led by Saudi Arabia and the United Arab Emirates continues to drive government investment in food security. In addition to continued demand for reliable sources of food and beverage imports, governments in the Gulf Cooperation Council (GCC) are investing in projects to increase local production, such as Oman’s announcement of a new 25,000 head dairy worth US$260 million.
- Victorian food and beverage exporters can expect to see continued interest from buyers in the Middle East & North Africa.
- There are opportunities for water management and agricultural businesses to export goods and services to support GCC projects which build domestic production capabilities.
- Victoria is well positioned to attract further investment into farms and food processing sites, as GCC states look to secure supply chains.
In December 2017, the Victorian Government announced new initiatives to strengthen trade, investment and institutional ties between Victoria and Israel. This includes plans to establish a Trade and Investment Office in Tel Aviv, a new Biomedical Innovation and Commercialisation Exchange program and an exclusive agreement with the Israel Australia Chamber of Commerce to provide targeted in-market support for Victoria. In addition to new initiatives, Victorian organisations can still access funding through the Victoria-Israel Science Innovation and Technology Scheme (VISITS).
Implications for Victoria include:
- Improved access for Victorian exports to market intelligence, advice and introductions in the Israeli market.
- Greater profile in-market for Victoria’s world-class capabilities in key sectors such as health and medtech; water management and agtech; cyber security and defence; and digital technologies.
- An additional avenue to identify and engage with Israeli partners in biomedical research and commercialisation projects.