Complex Made Simple

VAT update: Qatar cabinet approves new law today

Making a leap toward the implementation of value-added tax (VAT) in Qatar, the Cabinet has approved a draft law on the proposed new levy and its draft executive regulation.

Although a date has not been finalised, policy makers in the GCC countries plan to introduce a five per cent VAT at the start of next year.

During a meeting held at the Emiri Diwan, the Cabinet also approved a draft law on income tax and its draft executive regulation, as well as a draft decision of the Council of Ministers to issue the executive regulation of the selective tax law, the official Qatar News Agency (QNA) reported.

The Ministry of Finance has prepared the draft law on VAT in accordance with the unified GCC agreement on it.

The agreement obligates each member state to take the necessary steps domestically for issuance of the relevant local law and procedural policies in order to implement the tax with a view to executing the agreement’s provisions. The draft law is expected to provide details on how Qatar will interpret the GCC framework and deal with key matters where it has discretion.

Standard rate for VAT

VAT will be levied on the supply of goods and services at a standard rate of five per cent. According to experts, the new indirect tax will represent an important new source of revenue for Qatar and will be another action to move away from the economy being oil dependent.

Meanwhile, the draft legislation on income tax is meant to replace the Income Tax Law promulgated by Law No 21 of 2009 and Law No 17 of 2014, “which exempt the share of non-Qatari investors in the profits of some companies and investment funds from income tax”, QNA said.

It also falls within the “development framework of tax legislation to ensure the enhancements of revenues in the tax sector, simplification of procedures and facilitation of examination, connection and collection procedures, which in turn will promote tax compliance”.

The draft executive regulation of the selective tax law includes provisions concerning tax entitlement, declaration of loss or damage of selective goods, inspection of damaged goods, registration, tax declaration, rules of payment of tax in the case of local production, maintenance of accounting systems, the language of accounting records, and control and inspection rules.

HE the Deputy Prime Minister and Minister of State for Cabinet Affairs Ahmed bin Abdullah bin Zaid al-Mahmoud said the Cabinet also approved a draft decision of the Council of Ministers to amend some provisions of Decision No 18 of 2011 to nominate the chairman and members of the Tax Exemption Committee, organise its work and determine its rewards.

The committee is “competent to receive and examine requests for exemption from taxation and study the cancellation of previous exemptions granted due to breach of legal obligations or deviation from their purposes, and prepare recommendations on them”.

Editor’s note: AMEinfo will continue to explore VAT and its impact on citizens and businesses. Watch this space for more updates.