GCC Economic And Social Structures Will Likely Curb Tax Reforms

Tax rates are low in the Gulf Cooperation Council (GCC) countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and Abu Dhabi (a member of the United Arab Emirates). Yet, following the plunge in oil prices in mid-2014, and given the probability that they will stay relatively low in the next few years, GCC governments have experienced some fiscal deterioration. They are now considering an array of measures to diversify and increase their tax revenues. We expect that most of the region will introduce an important initial measure--a 5% value-added tax (VAT) rate--in 2018-2019. However, in our view, GCC countries' economic and social models will constrain the implementation of further substantial tax reforms. The rollout of VAT should support the diversification

...January 25, 2018 Tax rates are low in the Gulf Cooperation Council (GCC) countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and Abu Dhabi (a member of the United Arab Emirates). Yet, following the plunge in oil prices in mid-2014, and given the probability that they will stay relatively low in the next few years, GCC governments have experienced some fiscal deterioration. They are now considering an array of measures to diversify and increase their tax revenues. We expect that most of the region will introduce an important initial measure--a 5% value-added tax (VAT) rate--in 2018-2019. However, in our view, GCC countries' economic and social models will constrain the implementation of further substantial tax reforms....

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