Gulf states prepare for VAT in time of crisis

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If the Qatar crisis is prolonged, the country might want to delay the implementation of tax reform

Oil-rich Gulf countries, which for decades have attracted millions of foreign workers thanks to their reputation as tax-free havens, aim to introduce value-added tax in 2018 to plug budget gaps.

On top of administrative and technical hurdles, however, the project now faces an unprecedented diplomatic crisis after Saudi Arabia, the United Arab Emirates and Bahrain on June 5 severed all ties with Qatar, their partner in the Gulf Cooperation Council.

Saudi Arabia, the UAE and Qatar are due to introduce VAT in early 2018, with the other three GCC members – Bahrain, Kuwait and Oman – following at a later date.

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