‘Essential food items sans VAT in the GCC’

Manama : A range of essential foodstuffs will be exempted from Value Added Tax (VAT) when it is implemented in the GCC countries. 

The GCC regions are expected to implement VAT by 2018 as the nations attempt to diversify the economy. Healthcare, educational and social services may also be exempted from the VAT tax.  

“Under the GCC Customs Law, there are a range of products that are exempted from Customs duties and we expect the same food items to be VAT zero rated. These food items include fresh fruit, coffee, tea, wheat, cereal flours, sugar, infant milk foods, uncooked pasta and a range of other basic food items,” Ahmed Amor al Esry, Office Managing Partner, EY Oman was quoted as saying by the Oman Observer.

According to him, the cost of certain beverages and luxury items will increase. “GCC countries are expected to introduce excise duty on certain beverages that are harmful to health, including those with a high sugar content. Therefore, the cost of some food items is likely to increase in excess of the inflation rate of five per cent as a result of VAT implementation,” he said. 

“We expect the VAT exemptions for basic food items to be standard across the GCC,” the official added.