Mubasher: The value-added tax (VAT) will be implemented in Saudi Arabia and the United Arab Emirates for the first time, starting from 1 January.
The UAE targets around AED 12 billion ($3.3 billion) VAT income in the first year, as the 5% VAT will be levied on the majority of goods and services, including petrol and diesel, food, clothes, utility bills and hotel rooms.
It is worth mentioning that road tolls have been hiked and a tourism tax has been applied.
On the other hand, some services will be exempted from the tax or given a zero-tax rating, including medical treatment, financial services and public transport.
Meanwhile, Saudi Arabia has imposed a tax on tobacco and soft drinks, in addition to cutting some subsidies offered to locals.
The kingdom has no intention to introduce income tax, on which most residents would pay 0% tax on their earnings.
Given the International Monetary Fund (IMF) has been calling for the GCC countries to diversify their sources of income away from oil reserves.
GCC states have been luring foreign workers for a long time, promising them a tax-free living, though governments aim at boosting revenues upon lower oil prices.
Furthermore, other GCC states, including Kuwait, Bahrain, Oman, and Qatar are planning to introduce VAT, while some have delayed plans to 2019.
