TAC Companions

VAT is a multi-stage tax imposed on the supply of goods and services that are:

• Taxable.
• Consumed / enjoyed / undertaken in the GCC.
• Made by a taxable person and
• Made in the course or furtherance of any business.

VAT is also imposed on the importation of goods (except covered by specific import relief orsuspension schemes) and on imported services into the GCC.

All supplies fall within three (3) categories:

• Standard rated (5%)– taxable supplies (applicable to most goods and services).
• Zero rated (0%) – taxable supplies (applicable to exported goods and services, and certain domesticsupplies as specified in the law) and
• VAT exemption (No VAT applicable)

Any person whose turnover from taxable supplies exceeds (under the historical method) or is expected to exceed (under the future method) the thresholds as specified in the law over twelve (12)months will be required to register for VAT. Every VAT registrant is a VAT collecting agent for the Tax Authority.

Under the VAT regime, a VAT-registered supplier would be entitled to claim Input Tax on his purchases or acquisition of goods and services if:

• The goods or services are acquired in the course or furtherance of business.
• The purchases on which VAT is incurred is directly attributable to the making of taxable supplies.
• The VAT incurred is supported by valid Tax Invoices or Customs importation documents.
• Subject to meeting other requirements as specified in the law.