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Wed 5 Oct 2016 11:37 AM

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Qatar set to introduce VAT during 2018

VAT will be introduced at an expected 5% rate in the UAE starting January 1, 2018, says audit firm BDO Qatar

Qatar set to introduce VAT during 2018

Qatar is likely to introduce value added tax (VAT) between January 2018 and January 2019, according to audit firm BDO Qatar.

Speaking at a seminar the firm organised in Doha, chair of the BDO International VAT Centre of Excellence Ivor Feerick predicted the introduction of the tax will present “significant challenges for the local government authorities,” reported Gulf Times.

Feerick said the prediction followed surveys and presentations showcased to 1400-1500 clients of BDO local firms in each of the six gulf countries over the past 10 days.

He said the tax will be introduced at an expected 5% rate in the United Arab Emirates and Kuwait starting January 1, 2018 while Bahrain, Oman, Qatar and Saudi Arabia will introduce it between then and January 1, 2019.

Feerick added he expects gulf countries to adapt features of the European Union VAT System.

“Whereas I expect that certain educational and healthcare services will be purely ‘exempt’ from value added tax with no entitlement to VAT recovery on costs by the related service provider, I expect the provision of basic foodstuff (such as bread, milk, fruits, vegetables and meat) to be ‘zero-rated’ (exempt with credit, thus enabling the suppliers of basic foodstuffs to recover VAT on their operating costs etc,” he said.

The chairman said VAT will result in businesses becoming tax collectors on governments’ behalf.

“And apart from increasing their administration and IT related costs, [businesses] are likely to be exposed to significant interest, penalties and potentially more serious exposures for any non-compliance with the new legislation”,  said Feerick.

BDO officials urged businesses to start planning their VAT strategy without delay.

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