It seems reasonably clear that by January 1, 2018 events will be set in motion for the adoption of a community-wide 5% value added tax (VAT) in the six Member States of the Gulf Cooperation Council (GCC). The GCC's Framework VAT document is expected to be published by the end of October 2016. One of the clearest, consistently placed observations is that the Arabian VATs will be destination-based and modeled on a European credit-invoice design. Intra-Gulf business-to-business (B2B) transactions will be effectively zero-rated by the supplier, and the buyer's VAT will be directed to the destination jurisdiction. It is not clear if the mechanism directing this deposit to the destination jurisdiction will be through customs agents, a buyer's reverse charge procedure as in the EU, or a seller's remission of VAT directly (or indirectly) to the foreign treasury through a one-stop-shop. The lack of clarity on this final element does not detract from the “true ring” of the other observations. This paper drills down to the next level. How (exactly) will (or should) the Arabian VATs intra-Gulf zero-rating in goods be implemented? Will the same mechanism be used for intra-Gulf and extra-Gulf tradable services? There is neither public commentary, nor private statements on the issues raised by this implementation question, but the warning flags are up. The procedures adopted by the EU to implement its zero rating/reverse charge mechanism have been the core structural problem underpinning the EU's struggle with MTIC and MTEC frauds. Will the GCC follow suit, or have they found another/better way? There are indications that the GCC may just have found a better way forward, and it will be implemented. There are two traditional approaches to crafting statute that will put in place a zero rate regime for cross-border transactions within a community – (a) the customs-controlled approach, and (b) two accounting-controlled approaches (a reverse charge or a one-stop-shop). Currently there is (c) a technology-controlled (real-time) implementation for each of these regimes. This paper contends that the Arabian VATs will benefit from history, and they are ideally positioned to show the VAT community how to use real-time technology to solve some of its most difficult cross-border trade problems. A common example will assist throughout this paper
