Unified tax collection soon

As a step to be taken under the new GCC customs union, Gulf states will soon collect the unified five per cent customs duty on goods at their first GCC destination.

This arrangement is part of temporary moves they will take during a three-year transition before fully shifting to the new system, senior customs officials said.

They said members of the UAE Customs Council, representatives from the ministries of finance and industry, and economy and commerce, and local customs departments will meet on Monday to discuss the mechanism collecting duty and related issues.

They said, after the transitional period is over, unless Gulf states reduce it later, each GCC state will collect customs duty in accordance with set percentages that match the level of its revenues and imports.

"Under the temporary arrangement, the five per cent tax will be collected in Saudi Arabia, for example, if it is the first destination," they said.

"But if a Saudi trader decides to sell his goods to a UAE merchant and does not want to show him the customs invoices, maybe to hide his margins, the trader will then have to pay five per cent to UAE authorities."

On permanent arrangements, they said: "Revenues will be gathered in a collective fund divided among Gulf states as per set percentages. It would not be logical for a country with less population, revenue and size of imports to collect more than a bigger one."

They, however, stressed that GCC states have endorsed the lists of exempted goods, goods of special nature and taxed goods.

GCC states will continue to collect 100 per cent tax on cigarettes, pork and alcohol.

"We have amended and agreed on the lists of taxed and exempted goods. But we have opted to maintain the 100 per cent tax on cigarettes and keep those on goods of special nature because they are not imported by all."

They also added that other procedures related to taxes, like inspection of goods, will remain unchanged. "We do not want drugs to be smuggled with goods. They have to be inspected."

They said the new system may force the UAE to employ more people.