• The member states of the Gulf Cooperation Council are:

  • The United Arab Emirates,

  • The Kingdom of Bahrain,

  • The Kingdom of Saudi Arabia,

  • The Sultanate of Oman,

  • The State of Qatar,

  • The State of Kuwait,

• Based on the objectives stated in the Basic Law of the Gulf Cooperation Council aimed at the importance of developing the existing cooperative relations among them in various fields.

• In line with the objectives of the Economic Agreement among the Gulf Cooperation Council countries of 2001, which seeks to achieve advanced stages of economic integration and establish similar legal frameworks and regulations in the economic and financial fields.

• And with the desire to enhance the economy of the Council states and to continue the steps that have been taken to establish economic unity among them.

• Based on the decision of the Supreme Council in its thirty-sixth session (Riyadh, December 9-10, 2015) regarding the unified imposition of a value-added tax at a basic rate of 5% by the Gulf Cooperation Council countries, and authorizing the Financial and Economic Cooperation Committee to complete all necessary requirements for the approval of the (Unified Agreement on Value Added Tax for the Gulf Cooperation Council Countries) and to sign it. This agreement aims to establish a unified legal framework for the introduction of a general consumption tax in the Gulf Cooperation Council countries called (Value Added Tax) imposed on the import and supply transactions of goods and services at every stage of production and distribution.

  • It has been agreed as follows:

In the application of the provisions of this Agreement, the words and phrases below shall have the meanings indicated next to each of them unless the context of the text requires otherwise:

The Council: The Cooperation Council for the Arab States of the Gulf.

The Agreement: The Unified Agreement for Value Added Tax for the Council countries.

The Tax: The value-added tax imposed on the import and supply of goods and services at every stage of production and distribution, including deemed supply.

The Member State: Any state that enjoys full membership in the Council according to its basic law.

The Territory of the Council States: All territories of the member states.

The Local Law: The value-added tax law and related legislation issued by each member state.

The Economic Activity: The activity that is practiced continuously and regularly, including commercial, industrial, agricultural, professional, or service activities, or any use of tangible or intangible assets, and any other similar activity.

The Taxable Merchant: The merchant subject to tax in any member state whose main activity is the distribution of gas, oil, water, or electricity.

The Place of Business: The place where the business is legally established or the place of actual management, where the main decisions related to the conduct of business are made if it differs from the place of establishment.

The Permanent Establishment: Any fixed place of business other than the place of business, where business is conducted and characterized by the presence of human and technical resources on a permanent basis that enables the person to supply or receive goods or services.

The Residence of the Person: The location of the person's place of business or any other type of permanent establishment, and in the case of a natural person, if they do not have a place of business or permanent establishment, it shall be their usual place of residence. If a person has a residence in more than one state, the residence shall be considered to be in the place most closely connected to the supply.

Resident Person: A person is considered a resident in a state if they have a place of residence there.

Non-Resident Person: A person is considered a non-resident in a state if they do not have a place of residence there.

The Supplier: The person who supplies goods or services.

The Client: The person who receives goods or services.

Reverse Charge Mechanism: The mechanism under which the taxable client is obliged to pay the tax due on behalf of the supplier and is responsible for all obligations stipulated in the Agreement and local law.

Related Persons: Two or more persons where one has the authority to direct and supervise the others, such that they have administrative authority enabling them to influence the financial, economic, or organizational operations of the other persons, including persons subject to the authority of a third person enabling them to influence their operations financially, economically, or organizationally.

The Supply: Any form of supply of goods and services as stipulated in Article (8) of this Agreement.

Input Tax: The tax borne by the taxable person concerning the goods or services supplied to them or imported for the purpose of conducting economic activity.

The Unified Customs Law: The Unified Customs Law for the Cooperation Council for the Arab States of the Gulf.

The First Point of Entry: A customs point for the entry of goods into the territory of the Council states from abroad according to the Unified Customs Law.

The Final Destination Point: The customs point for the entry of goods in the destination state within the territory of the Cooperation Council.

The Consideration: Everything that the taxable supplier has received or will receive from the client or a third party in exchange for the supply of goods or services, including value-added tax.

Exempt Supplies: Supplies on which no tax is imposed, and for which input tax related to them is not deductible according to the provisions of the Agreement and local law.

Intra-Supplies: Supplies of goods or services by a supplier residing in one member state to a client residing in another member state.

The Goods: All types of tangible property (physical assets) including water and all types of energy, including electricity, gas, lighting, heating, cooling, and air conditioning.

Import of Goods: The entry of goods from outside the territory of the Council states into any member state in accordance with the provisions of the Unified Customs Law.

Export of Goods: The supply of goods from any member state to outside the territory of the Council according to the provisions of the Unified Customs Law.

The Competent Tax Authority: The government agency concerned in each member state responsible for managing, collecting, and enforcing the tax.

Deductible Tax: Input tax that may be deducted from the tax due on supplies for each tax period according to the provisions of the Agreement and local law.

Capital Assets: Tangible and intangible assets that form part of the business assets and are designated for long-term use as a working tool or investment means.

The Tax Period: The time period for which the net tax must be calculated.

The Net Tax: The tax resulting from deducting the deductible tax in a member state from the tax due in that state during the same tax period, and the net tax may either be payable or refundable.

The Mandatory Registration Threshold: The minimum value of actual supplies, whereby the taxable person becomes obliged to register for tax purposes.

The Optional Registration Threshold: The minimum value of actual supplies, whereby the taxable person may request registration for tax purposes.

The Ministerial Committee: The Financial and Economic Cooperation Committee of the Council.

The Agreement applies in the territory of the Council countries and imposes tax on the following transactions:

1. Taxable supplies made by a taxable person in the territory of the member state.

2. The receipt by the taxable client of goods and services supplied to him by a non-resident and non-taxable person in the member state. In cases where the reverse charge mechanism applies.

3. The importation of goods by any person.

The deadlines and periods stipulated in the Agreement shall be calculated according to the Gregorian calendar.

Each member state may treat the tax group as a single taxable entity, in accordance with the controls and conditions it establishes for this purpose. The term "tax group" refers to two or more legal entities that are residents in the same member state.

• 1. The term "supply of goods" refers to the transfer of ownership of these goods or even the action of dealing with them as an owner.

• 2. The supply of goods includes the following transactions:

  • A- Waiver of possession of the goods under an agreement that stipulates the transfer of ownership of these goods or the possibility of transferring them at a later date than the date of the agreement, no later than the date of full payment.

  • B- Granting real rights derived from ownership that allow the use of properties.

  • C- Transfer of ownership of the goods for consideration in a compulsory manner pursuant to a decision issued by public authorities or any applicable law.

• 1. The taxpayer who transfers goods that are part of its assets, from their location in one Member State to another location in another Member State, is considered to have supplied goods.

• 2. The transfer of goods mentioned in the first paragraph of this article is not considered a supply of goods when the transfer is for one of the following purposes:

  • A- The use of the goods in the other Member State temporarily under the conditions of temporary admission as stipulated in the Unified Customs Law.

  • B- When the transfer of goods is part of another taxable supply in the other Member State.

Any transaction of supply that does not constitute a supply of goods according to the provisions of this Agreement is considered a service supply.