VAT and the automotive industry in the GCC

The introduction of Value Added Tax (VAT) in the Gulf Cooperation Council (GCC) is likely to give rise to some significant issues and considerations for the automotive sector businesses. Given the complexity of VAT, as it applies to the sector, all parties in the chain of supply must carefully consider their positions and understand the impacts, to ensure they are ready to implement the relevant legislative changes. So how will VAT implementation in the GCC affect the automotive sector?

The release of the Treaty is a landmark event for the region and marks the true beginning of VAT implementation across the GCC. The Treaty establishes the common principles of the VAT system which is to apply in each GCC State and provides a structure on which domestic VAT legislation will be developed. The publication of the Treaty means we have clarity over the principles which every State will be required to enact and can confirm our understanding of how VAT in the GCC will impact the automotive sector.

The summary document aims to give a greater understanding of the introduction of VAT in the GCC and how VAT will impact the automotive sector and what are the associated challenges for all parties in the supply chain of the automotive businesses as per the below:

• Basic concepts of the GCC VAT Treaty
• What will be the VAT liability for supplies in the automotive sector in the GCC?
• What are the business issues that will arise upon the introduction of VAT in the GCC?