14 Aug Shoura Council approves VAT law
Saudi Arabia’s Shura Council, which is al known as the National Consultative Assembly, approved the added value tax draft in the 45th ordinary session under the chairmanship of Vice-Speaker Dr. Mohammed bin Amin Al-Jeffry.
This has been a major step towards the levy of sales tax in the country and create alternative sources of revenue by the Government, especially when they are taking measures to cope financially owing to the decreasing oil prices.
The approval by the most-powerful consultative body was given, only when the financial committee on VAT submitted its report to the council and it was verified that the draft law is in sync with the provisions of uniform consensus formed by the GCC countries.
This approval is the result of the follow up of the public consultation launched in June 2017 on the draft law. The Council also emphasized on the necessity of creating a unified program for the citizen’s account before the enforcement of any system.
So far, only two countries, Saudi Arabi and the UAE have decided to start enforcing the VAT laws by January 1st, 2018 and out of which, the UAE still has to determine and finalize the tax laws and other secondary rules on the tax enforcement and collection procedures.
The International Monetary Fund (IMF) is predicting that the introduction of VAT laws in the Gulf countries will help in growing their GDP by 1.4 percent, which will be a huge relief for these countries, amidst the obstinately falling oil prices.
The expected rate of VAT across GCC is expected to be 5% initially, which can be increased eventually. The initial framework of the VAT taxation laws will be similar to that of the countries in the EU and the UK and taxes on goods, services and imports will be levied.