VAT in the GCC: Country-by-Country Comparison (UAE, KSA, Oman, Bahrain, Qatar)

VAT in the GCC: Country-by-Country Comparison (UAE, KSA, Oman, Bahrain, Qatar)

The Gulf Cooperation Council (GCC) introduced Value Added Tax (VAT) as part of its economic diversification strategy, moving away from heavy reliance on oil revenues. While all six GCC states signed the Unified VAT Agreement in 2016, implementation has been phased, and each country has its own rate, rules, and compliance requirements.

If you’re doing business in the region, it’s essential to understand the differences in VAT frameworks across UAE, Saudi Arabia, Oman, Bahrain, and Qatar.

1. United Arab Emirates (UAE)

• Implementation Date: January 1, 2018
• VAT Rate: 5% standard rate
• Exempt & Zero-Rated Sectors:
  • Zero-rated: exports, international transport, certain healthcare and education services.
  • Exempt: certain financial services, residential property leases, and local passenger transport.
• Registration Threshold:
  • Mandatory: AED 375,000 annual turnover.
  • Voluntary: AED 187,500.
• Compliance: Quarterly VAT returns are standard, with monthly returns required for larger taxpayers.
• Authority: Federal Tax Authority (FTA).

The UAE is seen as having one of the simplest and most business-friendly VAT systems in the GCC.

2. Saudi Arabia (KSA)

• Implementation Date: January 1, 2018
• VAT Rate: 15% standard rate (increased from 5% in July 2020).
• Exempt & Zero-Rated Sectors:
  • Zero-rated: exports, medicines, qualifying financial services.
  • Exempt: some financial services, residential real estate leases.
• Registration Threshold:
  • Mandatory: SAR 375,000.
  • Voluntary: SAR 187,500.
• Compliance: Monthly VAT returns for businesses with turnover above SAR 40m; quarterly for smaller businesses.
• Authority: Zakat, Tax and Customs Authority (ZATCA).

KSA has the highest VAT rate in the GCC and stricter compliance, with frequent audits and e-invoicing requirements.

3. Oman

• Implementation Date: April 16, 2021
• VAT Rate: 5% standard rate
• Exempt & Zero-Rated Sectors:
  • Zero-rated: basic food items, exports, medicines, medical equipment.
  • Exempt: financial services, healthcare, education, local passenger transport.
• Registration Threshold:
  • Mandatory: OMR 38,500.
  • Voluntary: OMR 19,250.
• Compliance: VAT returns are usually filed quarterly.
• Authority: Oman Tax Authority.

Oman’s VAT system is still relatively new, but it closely mirrors the UAE model.

4. Bahrain

• Implementation Date: January 1, 2019
• VAT Rate: 10% standard rate (increased from 5% in January 2022).
• Exempt & Zero-Rated Sectors:
  • Zero-rated: basic food, education, healthcare, exports.
  • Exempt: financial services, residential property, local transport.
• Registration Threshold:
  • Mandatory: BHD 37,500.
  • Voluntary: BHD 18,750.
• Compliance: Quarterly VAT returns, though some larger businesses may need to file monthly.
• Authority: National Bureau for Revenue (NBR).

Bahrain raised VAT to 10% as part of fiscal reforms, positioning it between the UAE and Saudi Arabia.

5. Qatar

• Implementation Status: VAT law has been drafted but not yet implemented.
• Expected VAT Rate: 5%, as per the GCC Unified VAT Agreement.
• Authority: General Tax Authority (GTA).
• Current Status: Businesses in Qatar are preparing for VAT, but as of 2025, no official start date has been announced.

Qatar is expected to follow the UAE/Oman model with a 5% rate once implemented.

6. Kuwait (Future Outlook)

Although not part of the requested comparison, it’s worth noting:

• Kuwait has not implemented VAT yet but remains a signatory to the GCC agreement.
• Implementation has been delayed due to political and economic considerations.

Quick Comparison Table

Final Thoughts

VAT is now a core part of doing business in the GCC. While the framework is unified under the GCC agreement, each country’s VAT law has unique rates, exemptions, and compliance obligations.

• UAE and Oman: business-friendly 5% rate.
• Bahrain: moderate 10% rate.
• KSA: high 15% rate with strict compliance.
• Qatar & Kuwait: yet to launch VAT.

At GCC Accounting, we help businesses across the GCC with VAT registration, filing, compliance, and advisory—ensuring you stay fully compliant while optimizing your tax position.