VAT In Qatar: Quick Guide on VAT For Qatari Businesses
As part of its commitment under the GCC VAT Agreement, it is expected that Qatar will implement Value-Added Tax (VAT) during the year 2024. This follows the implementation of VAT in the UAE, Saudi Arabia, Bahrain and Oman.
What is VAT in Qatar?
VAT is a consumption tax that applies to the supply of goods and services – it is charged at each stage of a chain of supply, with end-consumers ultimately bearing the cost. VAT is a complex tax, with most supplies subject to the standard rate (5% under the GCC VAT Agreement, although this now varies by state), while some supplies by concession are subject to the zero-rate or exemption.
Under the GCC VAT Agreement, businesses with taxable turnover exceeding USD$100,000 per annum must register and account for VAT to the authorities, while those with taxable turnover/expenses exceeding USD$50,000 per annum may register on a voluntary basis.
How will VAT affect my business in Qatar?
You will need to examine and monitor your business activities to understand your VAT obligations, and when you may be required to register. Once registered, you will be required to charge, collect and account for VAT via your VAT return to the authorities – expected to be on a monthly or quarterly basis – and issue VAT invoices to your customers.
Managing VAT will most likely require you to make changes to your accounting systems/ERP, finance processes and contractual arrangements – particularly on long-term and high value contracts – and you may require extra staff and/or in-house VAT expertise. At a minimum, staff will need to be trained in VAT, and we recommend an adviser to support you with the ongoing complexity of the tax.
Businesses and VAT in Qatar: What should I do now?
Organizational responsibility for VAT plays a key role in any successful implementation project – assign a ‘steering committee’ and work with your adviser to conduct an impact assessment. The impact assessment will help you identify how VAT will affect your business, identify key risks, changes required, recruitment/training needs, and allow you to plan effectively for VAT.
Each of your purchases and sales must be examined as part of this process to understand how VAT will affect supplies made to your customers, and where costs may arise as a result of restricted VAT on purchases. Long-term contracts should also be carefully considered, as failure to consider VAT in such arrangements can result in a significant cost to you.
Planning For VAT Implementation in Qatar
A good implementation project takes at least 6 months to successfully complete. This means if VAT is to be implemented mid-2024, you must start to consider the impact of VAT now. Speak to us today to discuss how we can help.