Gulf states committed to VAT, dates will vary: IMF

Dubai / Reuters

All six countries in the Gulf Cooperation Council remain committed to introducing value-added tax, though they will do so at different speeds, a senior International Monetary Fund official said. “My feeling, through my interaction with the authorities, is that they are still committed and they are still preparing implementation,” Jihad Azour, head of the IMF’s Middle East department, said in an interview.
Seeking to close budget deficits caused by low oil prices, GCC states have agreed to introduce VAT at a 5 percent rate in 2018 — a big step for governments that have traditionally levied little tax and relied
instead on oil revenues.
The plan requires to draft
detailed regulations, register companies paying the tax and create bureaucracies to oversee the system.
The GCC states originally intended to introduce VAT simultaneously in January. Saudi Arabia and the UAE continue to say they will do so and have made considerable preparations, but some other countries are much less further along in preparing.
Tax experts in the region believe Kuwait may lag, because of its slow-moving civil service and because its relatively independent parliament may want a say in the process. Officials in Oman have not announced a firm date for VAT, while Bahraini officials have said it is expected by mid-2018.
Since the regional deal on VAT was reached, Saudi Arabia, the UAE and Bahrain have cut diplomatic and transport ties with Qatar, accusing it of supporting terrorism. Qatari officials have not said if this could affect their plan for VAT.
However, Azour said he understood all GCC states remained committed to the tax. Countries with larger financial reserves relative to their deficits may be able to introduce the tax more slowly, he added.
“The speed of implementation of it will vary — some will come in 2018, some may need more time.”
Because the GCC’s two biggest economies will introduce VAT at roughly the same time, trade flows in the region won’t be distorted if the other countries implement the tax at different times, Azour said.
EGYPT’S REVENUES SEEN IMPROVING
Egypt’s economic reforms appear to be working, with growth and revenues picking up in some areas, a senior International Monetary Fund off-
icial said.
“Positive results are being progressively seen,” Jihad Azour, head of the IMF’s Middle
East department, said in an
interview.
He was speaking as an IMF delegation visited Cairo to review Egypt’s reforms before providing another installment of a three-year, $12 billion loan deal which the IMF agreed last November.
Azour said he did not want to pre-judge the results of the mission’s review, but added: “Signs of economic recovery are witnessed, both in terms of increased growth in certain sectors and in terms of growth in revenues, in areas such as tourism and FDI (foreign direct investment).”
The priority now is keeping up the pace of reform and accelerating structural change in the economy, he said.