Harmonizing Value Added Tax Legislation in the Gulf Cooperation Council: A Necessity for Economic Integration

Abstract

The elimination of discriminatory value added tax (VAT) laws on commodities are required for the proper functioning of the Gulf Cooperation Council (GCC) single market. The proper functioning of a single market entails the elimination of discriminatory internal VAT regulations of imported goods or services. Hence, the purpose of this study is to empirically examine the need for harmonizing VAT legislation among GCC countries. The data of this study was collected through a variety of sources, including the ministry's website, VAT law for each country, published articles, and other online data sources/websites with regards to VAT. The data were statistically evaluated using Microsoft Excel. The dependent variable in this study is Harmonization. The factors affecting Value Added Tax Legislation are also called independent variables. Through this search, they harmonize VAT legislation in the GCC countries to maximize the effectiveness of tax laws. That helps to know the challenges faced by GCC companies due to discriminatory VAT regulations and double taxation. There is a need to harmonize VAT legislation in the GCC countries to maximize the effectiveness of tax laws. This study adds value by assessing the present state and the need for harmonizing VAT legislation in the GCC countries. The timely approach of the study will help policymakers, regulators, and practitioners to understand the importance of harmonizing VAT legislation in the GCC.

Bibliometric analysis of value-added tax research: a comparative study between European Union and Gulf Cooperation Council countries

“…By January 1, 1970, member states had to replace their existing turnover tax system with a unified VAT system in accordance with the First and Second VAT Directives, which were published in 1967 (Hellerstein and Gillis, 2010). However, the GCC members decided to apply VAT on goods and services in 2018 due to the significant impact on oil prices (Al Mazroui et al , 2022). The GCC nations have developed their VAT model because neither the American nor the EU VAT systems are precisely aligned.…”

“…The GCC nations have developed their VAT model because neither the American nor the EU VAT systems are precisely aligned. Each GCC nation’s specific VAT regimes are governed by rules and exceptions (Al Mazroui et al , 2022).…”

“…The GCC nations have developed their VAT model because neither the American nor the EU VAT systems are precisely aligned. Each GCC nation's specific VAT regimes are governed by rules and exceptions (Al Mazroui et al, 2022). Tofan and Bostan (2022) looked at how applicable legal requirements affected the ease of remote payment control and adherence to the VAT system in the e-commerce market.…”

“…For businesses having subsidiaries in other EU nations, the costs associated with audits, litigation and transfer price planning are significant (European Commission, 2004; Barrios et al , 2020). Thus, it is essential to understand how crucial it is for the GCC’s VAT laws to harmonize (Al Mazroui et al , 2022). Harmonizing consumption taxes was believed to increase competition and promote market integration within the European Economic Community.…”