Tax rates - GCC VAT

    4 years ago

Tax rates - GCC VAT

The GCC framework has specified three types of VAT rates which may be levied by a member state for any supply of goods and services.

  1. Standard rate
  2. Zero rate
  3. Exempted (this category is exempted from VAT)


Standard Rate

A standard rate is a normal tax rate of VAT, it will be levied on all transactions (subject to VAT) and sectors unless specifically exempted or Zero rated. Currently, the tax rate is fixed at 5%.
Only registered supplier can charge VAT on an invoice, and registration number, tax rate, tax amount etc must be included on the invoice.

Zero Rate

A zero rate is VAT will be charged on the invoice at zero rate. The invoice will be required to show the tax column, but with a zero rate and zero value.

GCC frameworks have specifically mentioned some sectors for Zero-rated VAT, which includes investment in Gold, Silver or Platinum, Intra-GCC or International transportation, public health etc.

Tax Exempt

Supplies which are exempted, cannot be charged VAT and any purchases made for supply exempted Goods or Services are not eligible for Input tax credit. Exempted is not tax rate and it entirely different from VAT not applicable category, these items may subject to standard or Zero-rated VAT in future.


Above table explain the cases where input tax ( Tax paid on purchases) adjustment against the total payable not permissible under VAT law. If the taxable person dealing with both exempt and non-exempt supplies, input tax can be adjusted proportionately based on the total value of supplies.

Any taxable person making standard 5% rated supplies must collect the tax on his sales and is entitled to refund the tax paid on his purchases. Any person making zero-rated is not entitled to claim tax on his sales, but has the right to refund the tax paid on purchases. Any person making out of scope/exempt supplies will not collect VAT on his sales and is not entitled to refund the tax paid on his purchases.


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