Gulf News, 12 January 2025: Kuwait is weighing the introduction of VAT as GCC nations continue to reform their tax frameworks to diversify revenue sources and align with global standards.

The VAT adoption follows similar measures by other GCC countries, including Saudi Arabia and Bahrain, which have increased their VAT rates to 15% and 10%, respectively.

Qatar and Kuwait are expected to introduce VAT soon, further diversifying income beyond oil revenues.

VAT was introduced across the UAE since 2018 at a standard rate of 5%.

The introduction of VAT represents a pivotal step in the region’s economic transformation, providing governments with additional revenue to reinvest in infrastructure, public services, and sustainable development.

These efforts align with broader global trends as GCC nations modernise their economies and reduce dependence on hydrocarbons.

In addition to VAT, GCC countries are implementing the OECD-endorsed global minimum corporate tax rate of 15%, targeting multinational corporations with revenues exceeding €750 million.

This measure is designed to curb tax avoidance and ensure fair contributions from companies operating in historically low-tax jurisdictions, such as Dubai and Manama.

The UAE has already introduced a 9% corporate tax for businesses with profits above AED 375,000, while maintaining exemptions for small and medium enterprises and tax-free zones to retain its competitive edge.

Kuwait, along with other GCC nations, has implemented the 15% profit tax rate, and Bahrain is set to align with global tax regulations by 2025.

Saudi Arabia and Oman have joined the OECD framework, signaling a unified approach to corporate taxation.

Qatar, maintaining a 10% corporate tax, has indicated plans for future reforms.

Despite these changes, the GCC remains attractive for businesses, owing to its no-income-tax policy.

While Oman has considered a personal income tax for high earners, most GCC nations remain committed to a tax-free income environment.

To enhance compliance and efficiency, the region is embracing digital tax initiatives.

Saudi Arabia and the UAE have introduced e-invoicing systems to reduce fraud and streamline operations for businesses, showcasing their commitment to modernising tax systems.

These reforms aim to strengthen economic resilience, attract investment, and support job creation, positioning the GCC as a hub for sustainable growth and innovation.

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