[:en]The Gulf Co-operation Council (GCC) may witness the advent of value-added tax (VAT) in the next two to three years with its impact likely on the end-consumers but the levy may not be a “deterrent” for businesses, according to Ernst and Young (EY), a multinational professional services firm.

Highlighting that the VAT regime is currently under consideration in Egypt and the GCC, Finbarr Sexton, EY Mena (Middle East and North Africa) indirect tax leader, said these regimes would be introduced over the next two to three years.

While the standard tax rates are likely to be low in the initial years after implementation, the rates can be increased over time, thus contributing positively to government revenue collection, according to him.

Stressing that indirect tax will be a tax on consumption and will “inevitably be borne by the end consumer of the goods and services”, he said that “as a result, the taxes will be passed on by businesses to the end-consumer, therefore it is not expected to be a deterrent to businesses planning to establish in the region”.

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