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UAE suggests VAT for GCC in place of customs duty

posted on 22/11/2004: 658 views

The UAE has proposed to the Gulf Cooperation Council, GCC, countries adopting a unified system of Value Added Tax (VAT), as an alternative to the customs duties currently in force in the GCC, well-informed sources told "Al Khaleej”. The sources pointed out that the proposal had been presented to the recent meeting of GCC's Financial and Economic Cooperation Committee in Jeddah last month, where Saudi Arabia suggest that the proposal be discussed and a clear and uniform opinion about it be recommended.

Saudi Arabia however, believed that there was no contradiction between VAT and the customs duties currently applicable in GCC countries. After discussing the proposal, the committee decided to conduct a comprehensive study to work out a tax system that would be applicable collectively to the GCC countries, taking VAT and other alternatives into consideration.

It is noteworthy that the GCC countries started enforcing the customs union based on unified customs duties at five per cent as early as 2003 as part of an empirical stage for two years. The system would be finally implemented by January 2005. Value Added Tax is a general consumption tax assessed on the value added to goods and services. It is a general tax that applies in principle to all commercial activities involving the production and distribution of goods and the provision of services. It is a consumption tax because it is borne ultimately by the final consumer. (The Gulf Today)


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