In the rapidly changing legal environment of the GCC, the
introduction of Value Added Tax (VAT) is the hottest of hot topics.
In this briefing, we highlight what we know and, as importantly,
what we do not yet know about the imposition of VAT for GCC
businesses. We also suggest some simple steps businesses might
think about now, in preparation for the implementation of VAT.
What is VAT?
VAT is a tax on the supply of goods and services. VAT is paid by
the buyer of the goods or services at each step of the supply
chain. Collection of VAT is facilitated by businesses, through the
supply chain, on behalf of the government.
If you are in the middle of the supply chain, you can offset the
VAT you pay to your suppliers (known as input VAT)
from the VAT you collect from the buyers of your goods or services
(known as output VAT). You are required to account
to the government for the difference between the output VAT and
input VAT, if the output VAT is the higher amount.
