More time needed

However, the countries are aware that all states may not be ready to implement it on time and therefore, the GCC is giving time - up to another 12 months - to implement it.

According to a tax alert released by Ernst & Young after a value added tax briefing by the UAE Ministry of Finance, the UAE is on track to implement VAT from January 1, 2018, and it expects to release domestic VAT Law before the end of the first half of 2017, with detailed Executive Regulations to follow shortly after.

For levying tax under a VAT regime, products and services are divided into three broad categories — products with standard rates, zero rates and exempted supplies.

At GCC level, a list of basic food items have been agreed to be subject to the zero rate of VAT. The UAE does not have to apply this zero rate and it advised that it intends to subject these food items to the standard rate of VAT.

The UAE will apply a zero VAT rate to both healthcare and education services.

Ahmed Al Hooti, a member of the Oman chamber of commerce, said: “There still isn’t a system available for the government to impose the tax or collect money. Who will pay the VAT? Is it the consumer? or is it between the trader and consumer? What are the items that are subjected to the VAT? These are questions that still need to be answered.”

Alkesh Joshi, Director of Tax at EY, added: “According to the GCC framework, after VAT is implemented in two countries, the other four countries have to implement it within 12 months. Currently, UAE Saudi and Bahrain have made the announcement that they plan to go live with VAT by January 2018. If they follow that, the other four will have time until January 2019.”

Mubheen Khan, Chairman of Institute of Chartered Accountants of India-Muscat Chapter, said that he believes that Oman would be able to complete the legislative process this year.

“Oman would be able to complete the legislative process within this year looking at the urgency of meeting VAT implementation deadline and much needed non-oil and gas revenue in the range of OMR350400 million that VAT introduction is estimated to bring in,” he said.