JEDDAH — The GCC countries plan to introduce a VAT (value-added tax) system within the next two to four years, the “Paying Taxes 2013” report from World Bank, IFC, and PwC said. The study said the preparation for VAT implementation across all Gulf nations includes an intention to harmonize the VAT laws that will be introduced by adopting a VAT framework law that will be adopted by all GCC countries, much like the GCC Customs Union law which existed prior to the introduction of a national VAT law. “The question and the challenge will be whether the Middle East countries will be able to remain easy places to pay tax,” the report noted. “With a slowing world economy and the potential for stagnating oil prices, governments in both oil and non-oil rich countries will have a need to increase tax revenues in order to balance their budgets, and at the same time still provide an attractive business environment for investors.” The report said that governments continue to reform their tax systems despite global economic uncertainty, with 31 economies having taken steps from June last year through May 2012 to make it easier and cost less for small and medium businesses to pay taxes. While firms in two of the other countries in the top 5, Hong Kong and Saudi Arabia, have to make only three payments a year compared with the UAE's four, the fact that it takes the UAE firms 12 hours to make those payments compared with Saudi Arabia's 72 and Hong Kong's 78 hours propels the UAE to the top of the global ranking in ease of paying taxes, the report further said. “The report finds that over the last several years there has been a gradual reduction in the number of payments and in the number of hours spent by a medium-sized company to comply with its tax obligations. This reduction across all regions of the world in the burden of tax administration is a welcome development.” — SG
