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With the falling oil revenues, all the GCC member states have mutually agreed to introduce

value added tax (VAT) at a rate of five per cent in !"#, though the decision is yet to receive
final approval before being implemented, according to a top $mani official%
&ar'ish Al eloushi, $mans *inister of +inancial Affairs, said that GCC countries had already
reached a decision on the five per cent rate after negotiating on a rate bet'een three and
five per cent%
A spoesman from the -A.s *inistry of +inance had earlier said GCC countries are yet to
finalise their implementation policy, but they have agreed that the tax 'ill not be applied on
certain industries lie education, and health care% /taple food items 'ould also be exempted
from VAT%
The tentative policy for the tax implementation has already been approved by leaders of the
GCC countries, 0ounis Al 1houri, undersecretary at the -A.s *inistry of +inance had said
2e pointed that the -A. is expected to generate up to 34%5 billion as a result of introducing
VAT in the first year of implementation alone%
6t may be noted that VAT has been adopted by "7! countries and contribute ! per cent of
'orld8'ide tax revenues% The average standard rate in .- countries (excluding ne' members)
is almost ! per cent, 'here its revenues are 5%7 per cent of G&9%

6f the current oil prices remain, oil and gas revenue in the GCC 'ill fall significantly or even
disappear%% The non8oil public revenue
revenue 'ould be far from sufficient
sufficient to cover public spending,
especially as public spending rises 'ith respect to the G&9% This can push these economies to
run into ma:or fiscal difficulties%
As such the GCC might need to tae ma:or steps on taxation including that of introducing a
value added tax 'ith a uniform rate%