In brief
The Kingdom of Saudi Arabia has approved amendments to the Unified VAT Agreement for the Gulf Cooperation Council ("GCC VAT Framework") under Council of Ministers Resolution No. 887 dated 19 May 2026.
The amendments update key provisions of the original GCC VAT Framework signed on 27 November 2016. The amendments relate to intra-GCC supplies, supplies to non-registered persons, import VAT, VAT rate flexibility, and information sharing between tax authorities. Together, these changes give Member States greater administrative flexibility while strengthening the framework for cross-border VAT coordination within the region.
In more detail
Background to the GCC VAT Framework amendments
The original GCC VAT Framework established a common framework for VAT implementation across the Gulf Cooperation Council (GCC) countries – the United Arab Emirates, the Kingdom of Saudi Arabia, Bahrain, Kuwait, Oman, and Qatar (each a "Member State") – including a standard VAT rate of 5%.
Since then, Member States have adopted different domestic approaches, including different VAT rates and administrative practices.
The latest amendments update the framework to reflect those developments and to refine the mechanisms governing intra-GCC supplies, imports, and information sharing between tax authorities.
Scope of the amendments
The amendments primarily affect the provisions governing:
- Intra-GCC supplies of goods;
- Supplies to non-registered customers
- Payment of VAT on imports
- The standard VAT rate applicable within GCC Member States
- The operation of electronic systems and exchange of information between GCC tax authorities
The changes are expected to impact businesses involved in regional supply chains, customs operations, and cross-border GCC transactions.
VAT rate flexibility
The amended framework no longer requires all Member States to apply VAT at a fixed rate of 5%. Instead, each Member State may apply VAT at its domestic rate, provided that the rate is not lower than 5%.
This change effectively turns the previous 5% standard rate into a minimum threshold and accommodates the differing VAT rates already applied across the GCC, including the Kingdom of Saudi Arabia’s 15% VAT rate and the Kingdom of Bahrain's 10% VAT rate.
Intra-GCC supplies
The amendments revise the treatment of supplies of goods that are initially made without transport or dispatch, but are later found to have been transported to another Member State. In such cases, the amended framework no longer refers only to recovery of VAT by the destination Member State from the State of supply. Instead, it allows VAT to be adjusted or recovered between the relevant Member States, giving the mechanism broader scope and greater flexibility.
The amendments also clarify the structure of the framework by distinguishing between the default customs transfer mechanism and the Ministerial Committee’s authority to adopt alternative arrangements. While the Automatic Direct Transfer mechanism remains the default rule under the GCC Customs Union framework, the Ministerial Committee may introduce broader alternative provisions, including allowing the destination Member State to impose VAT at its point of entry and providing for the direct adjustment or refund of VAT previously paid in the State of supply to the customer, whether taxable or non-taxable.
Intra-GCC supplies to non-registered persons
The amendments also update the treatment of intra-GCC supplies made to individuals and non-registered persons. The SAR 10,000 threshold is retained, but the amended wording now refers to both VAT adjustment and recovery, rather than recovery alone.
The revised wording also permits Member States to impose VAT at customs entry points where evidence of VAT payment in another GCC Member State is unavailable, while additionally permitting direct refunds of VAT previously collected elsewhere in the GCC.
These changes may increase customs and compliance obligations for businesses making cross-border B2C supplies within the Member States.
Import VAT treatment
The amended framework retains the principle that VAT on imported goods is paid at the first point of entry and transferred to the final destination Member State through the customs mechanism. However, it also gives scope for alternative arrangements to be introduced.
In particular, the Ministerial Committee may adopt provisions allowing the destination Member State to impose VAT at its own point of entry, together with the adjustment or refund of VAT previously paid at the first point of entry. The rules on deferral of import VAT for taxable persons remain in place.
Expanded exchange of information and data sharing
The amendments broaden the information that may be accessed by the relevant tax authorities in connection with intra-GCC supplies. Under the amended wording, the right of access is no longer limited to supplies between VAT-registered taxable persons.
Instead, the relevant tax authorities in the Member States concerned may access information relating to intra-GCC supplies more broadly. This is intended to strengthen administrative cooperation, improve monitoring of intra-GCC transactions, and support VAT enforcement across the region.
Conclusion
The amendments to the GCC VAT Framework provide Member States with greater flexibility in setting VAT rates and administering cross-border VAT outcomes, while also strengthening the mechanisms for import VAT, intra-GCC adjustments and recovery, and information sharing between tax authorities.
Businesses operating across the GCC should review how these amendments may affect their supply chains, customs procedures, VAT reporting, and supporting documentation. The changes are particularly relevant for businesses making cross-border supplies, importing goods through one Member State for use in another, or dealing with supplies to non-registered customers.
* * * * *
Yasmeen Bader, Associate, has contributed to this legal update.