Saudi Arabia and the United Arab Emirates introduced Value Added Tax on Monday, a first for the Gulf States.
The Gulf states are forced to shun their tax-free status to boost revenues as their finances were hurt by lower oil prices.
The 5 percent levy was imposed on the majority of goods, including fuel, and services. There are no plans to introduce an income tax yet.
Initially, all six countries in the Gulf Cooperation Council had planned to introduce the 5 percent VAT on January 1, 2018. However, only Saudi Arabia and UAE went ahead with the move as planned.
Qatar reportedly plans to launch VAT in the second quarter of this year, while Oman and others have delayed it until 2019.
The International Monetary Fund estimated that the overall revenue impact of the VAT tax would be 1.5 percent of GDP for the UAE and about 1.6 percent for the Saudi Arabia by 2020.
by RTT Staff Writer
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