IT channel cautiously upbeat about proposed GCC VAT introduction

Regional IT sector is hoping the introduction of VAT in 2018 will promote financial transparency

Tags: Dubai Computer GroupDubai Computer Group (DCG) ( Computer Traders GroupTouchmate ( Middle East FZCO
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IT channel cautiously upbeat about proposed GCC VAT introduction DCG's general secretary Dharmendra Sawlani says the proposed VAT policy in the GCC could help in bringing about transparency and accountability to the IT industry.
By  Manda Banda Published  March 22, 2016

In the wake of the Gulf Cooperation Council (GCC) countries agreeing to introduce value added tax (VAT) at a rate of 5% in 2018, the regional IT industry has reacted to the tentative tax policy with cautious optimism.

Although the decision is yet to receive final approval before being implemented, the tentative policy for the tax implementation has already been approved by leaders of the GCC countries comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.

While GCC countries are still hammering out final details of implementing VAT in the regional bloc, they have agreed that the tax will not be applied on certain industries like education and health care.

For IT companies [vendors, distributors, resellers and systems integrators] providing hardware, software and IT services to this market, time to start preparing and assessing the broader impact the introduction of VAT will have on their businesses is now.

Ranjit Rajan, associate vice president, Consulting at IDC Middle East and Africa, said the introduction of VAT will have a wider impact on both IT suppliers and consumers in the GCC. Rajan added that VAT is a consumption tax that is ultimately borne by the final consumer. "It is an indirect tax that is collected by the seller or supplier and paid to the relevant authorities," he said.

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