Qatar Value Added Tax (VAT) Readiness

Introduction

In November 2016, the Gulf Cooperation Council (‘GCC’) States agreed on a common legal framework to introduce Value Added Tax (‘VAT’) in the region (‘GCC VAT Framework Agreement’). Further to this, the Kingdom of Saudi Arabia and the United Arab Emirates have implemented VAT effective 1 January 2018, followed by The Kingdom of Bahrain on 1 January 2019 and Sultanate of Oman on 16 April 2021. At present, the State of Qatar and the State of Kuwait are the two remaining States to implement VAT in line with the GCC VAT Framework Agreement.

As part of our ongoing aim to enhance our clients awareness, we hosted our annual Tax and Legal Seminar in Qatar in February 2024 to discuss regional and local tax advancements, with a key focus on the implications of Qatar's VAT introduction on businesses and the necessary preparations for VAT compliance.

VAT will affect all businesses in Qatar, either directly or indirectly. In theory, it should not create a net cost for businesses, except for certain exceptions like financial services. However, looking at previous VAT introductions in other GCC countries, it is apparent that the implementation of VAT has had a notable impact on businesses both operationally and financially. This is why we advise that businesses need to assess their procurement processes, operating models, IT systems, contracts, and legal structures promptly to prepare for VAT implementation and minimise the potential impact of this change.

A comprehensive grasp of the nuances within all sectors and industries within the country is vital for businesses to effectively navigate the VAT environment, given that each one may be impacted differently by VAT regulations. These variations arise from the unique characteristics of each sector and the specific VAT regulations stipulated by the law.

Our experts have outlined the lessons learned from the implementation of VAT in the GCC in our publication below