New Value Added Tax (VAT) Scheme for Saudi Arabia and the United Arab Emirates

On 1 January 2018, Saudi Arabia and the United Arab Emirates (UAE) implemented a new Value Added Tax (VAT) scheme at a standard rate of 5 per cent. Other members of the Gulf Cooperation Council (GCC) have also committed to introducing VAT. However, Bahrain, Kuwait, Oman and Qatar have delayed implementation until at least 2019.


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:

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