GCC Tax Comparison 2026 — VAT, Corporate and Income Tax Across All Six Gulf States

Short answer. The GCC runs four VAT rates and two states with none: Saudi Arabia 15%, Bahrain 10%, the UAE 5%, Oman 5%, with Qatar and Kuwait not yet implemented. The UAE charges corporate tax at 0% up to AED 375,000 of taxable income and 9% above it, levies excise tax on five goods categories, and imposes no personal income tax at all.

A decade ago “Gulf tax” was close to a contradiction in terms. In 2026 it is a six-country matrix that changes pricing, cash flow and structure decisions for anyone trading across the region. This guide is written from the UAE outward, because that is where we work and where we can point at the law rather than at a summary of it. Every UAE figure below is cited to the Federal Tax Authority, the Ministry of Finance or the UAE Government portal at u.ae. Where a figure belongs to another state, we name the authority it came from — and where we could not confirm a position this time, we say so rather than filling the gap.

The GCC tax matrix — August 2026

Tax	UAE	Saudi Arabia	Qatar	Bahrain	Oman	Kuwait
VAT standard rate	5%	15%	Not in force	10%	5%	Not in force
VAT registration threshold	AED 375,000	SAR 375,000	n/a	BHD 37,500	OMR 38,500	n/a
VAT voluntary threshold	AED 187,500	SAR 187,500	n/a	Confirm with NBR	Confirm with Oman TA	n/a
Corporate tax on business profit	9% above AED 375,000	Confirm with ZATCA	Confirm with GTA	Confirm with NBR	Confirm with Oman TA	Confirm with Kuwait MoF
Personal income tax	None	None	None	None	5% above OMR 42,000 from 2028	None
Excise tax on specified goods	Yes	Yes	Yes	Yes	Yes	Not implemented

Last verified 4 August 2026. UAE figures: Federal Tax Authority, Ministry of Finance and u.ae. Saudi VAT rate and thresholds: ZATCA. Bahrain rate and threshold: the Bahrain national portal and the National Bureau for Revenue. Oman rate, threshold and personal income tax: the Oman Tax Authority portal. Cells marked “confirm” are ones we did not independently verify with the relevant authority in this update, and we would rather leave a visible hole than fill it.

Three things fall out of that table. First, VAT divergence is the commercial fact that actually moves money: an identical product carries 15% in Riyadh, 10% in Manama, 5% in Dubai and Muscat, and nothing in Doha or Kuwait City. Second, the registration thresholds are a trap — they look almost identical across four states and are denominated in four different currencies, so a single regional turnover figure gives four different answers. Third, the UAE’s own rules moved twice in the last eight months, and most content written before 2026 is now describing repealed law.

What changed in the UAE while nobody was updating their blog

Two UAE instruments came into force recently, and both replaced things that regional comparison articles still quote.

Excise tax was re-rated on 1 January 2026. Cabinet Decision No. 197 of 2025, issued 27 November 2025, repealed Cabinet Decision No. 52 of 2019 outright. Sweetened drinks moved off a flat percentage onto a per-litre amount driven by sugar content, and carbonated drinks stopped being a standalone excise category.

Penalties were rewritten with effect from 14 April 2026. Cabinet Decision No. 129 of 2025, issued 9 October 2025, amended the tables appended to Cabinet Decision No. 40 of 2017. The late-payment mechanic is now a monthly penalty of 14% per annum on the unsettled payable tax, running from the day after the due date.

Here is the replacement history in one place, because it is the fastest way to check whether a source you are reading is current.

UAE instrument	Status	Replaced by	From
Cabinet Decision No. 52 of 2019 (excise goods and rates)	Repealed	Cabinet Decision No. 197 of 2025	1 January 2026
Cabinet Decision No. 40 of 2017 penalty tables	Amended	Cabinet Decision No. 129 of 2025	14 April 2026
Cabinet Decision No. 25 of 2018 (VAT on gold and diamonds)	Repealed	Cabinet Decision No. 127 of 2024	26 February 2025
Ministerial Decision No. 82 of 2023 (audited accounts)	Repealed for later periods	Ministerial Decision No. 84 of 2025	Periods from 1 January 2025
VAT Public Clarification VATP032	Replaced	VATP043	2025

Sources: the Ministry of Finance and Federal Tax Authority published texts of each instrument. Last verified 4 August 2026.

VAT state by state — where the differences actually bite

Saudi Arabia at 15% is the outlier that reshaped regional pricing when the rate tripled in July 2020. For a UAE business, Saudi Arabia is usually the first foreign VAT question that arises, because goods entering the Kingdom bear import VAT at 15% and because electronic services supplied to Saudi consumers can force a local registration. ZATCA sets mandatory registration at SAR 375,000 of annual revenue and voluntary registration between SAR 187,500 and SAR 375,000.

Bahrain at 10% doubled its rate from 5% on 1 January 2022. The Bahrain national portal states that any entity or individual carrying on an economic activity independently, with annual supplies above the mandatory threshold of BHD 37,500, must register with the National Bureau for Revenue and obtain a VAT registration certificate and account number before it starts charging the 10%.

Oman at 5% implemented VAT under Royal Decree 121/2020, later amended by Royal Decree 53/2021, and has stayed at the GCC framework rate. The Oman Tax Authority sets mandatory registration at OMR 38,500 of annual taxable supplies.

The UAE at 5% has held its rate since 1 January 2018 under Federal Decree-Law No. 8 of 2017. The Federal Tax Authority sets mandatory registration at AED 375,000 and voluntary registration at AED 187,500 of taxable supplies, imports or expenses. The mechanics live on our VAT services in Dubai page, and the arithmetic runs through the UAE VAT calculator.

Qatar and Kuwait signed the GCC Unified VAT Framework Agreement with everyone else and have implemented nothing since. Both have run preparation programmes; both have deferred. We could not confirm the current position directly with Qatar’s General Tax Authority or Kuwait’s Ministry of Finance when updating this guide, so treat it as a status to verify rather than a settled fact.

The UAE corporate tax position, in the detail a regional table cannot hold

Federal Decree-Law No. 47 of 2022 applies to financial years beginning on or after 1 June 2023. The rate structure is deliberately simple, and almost everything interesting sits in the reliefs and the compliance obligations rather than in the rate.

UAE corporate tax element	Position	Instrument
Rate below the threshold	0% on taxable income up to AED 375,000	Federal Decree-Law No. 47 of 2022
Rate above the threshold	9% on taxable income above AED 375,000	Federal Decree-Law No. 47 of 2022
Effective from	Financial years beginning on or after 1 June 2023	u.ae
Small Business Relief	Revenue at or below AED 3,000,000 in the period and all previous periods	Ministerial Decision No. 73 of 2023
Small Business Relief end	Tax periods ending on or before 31 December 2029	Ministerial Decision No. 73 of 2023 as amended by Ministerial Decision No. 131 of 2026
Audited financial statements	Revenue above AED 50,000,000, and every Qualifying Free Zone Person	Ministerial Decision No. 84 of 2025
Transfer pricing master and local file	Own revenue at or above AED 200,000,000, or MNE group revenue at or above AED 3,150,000,000	Ministerial Decision No. 97 of 2023

Last verified 4 August 2026 against the Ministry of Finance and Federal Tax Authority published texts.

Small Business Relief is the line most UAE SMEs care about and the one most often described loosely. Ministerial Decision No. 73 of 2023 lets a resident person elect to be treated as deriving no taxable income where revenue is at or below AED 3,000,000 — but the test applies to the relevant tax period and all previous tax periods. Once revenue breaks AED 3 million in any period, the relief is gone for later periods even if revenue falls back below the line. Qualifying Free Zone Persons and members of a multinational enterprise group cannot elect at all.

The audited-accounts rule caught a lot of free zone companies by surprise. Ministerial Decision No. 84 of 2025, issued 25 March 2025 and applying to tax periods commencing on or after 1 January 2025, requires audited financial statements from any taxable person with revenue above AED 50 million, and from every Qualifying Free Zone Person irrespective of revenue. A tax group prepares audited special purpose financial statements in the form the Federal Tax Authority specifies. The decision repealed Ministerial Decision No. 82 of 2023, which continues to apply to periods that started before 1 January 2025.

AED 375,000

The UAE threshold that does double duty — mandatory VAT registration and the point at which corporate tax moves from 0% to 9%

UAE excise tax after Cabinet Decision No. 197 of 2025

Excise is the UAE tax that regional comparisons get most wrong, because it was restructured on 1 January 2026. Federal Decree-Law No. 7 of 2017 remains the governing law. What changed is the rating decision underneath it.

Excise good	Rate or amount from 1 January 2026
Tobacco and tobacco products	100%
Liquids used in electronic smoking devices and tools	100%
Electronic smoking devices and tools	100%
Energy drinks	100%
Sweetened drinks, 8g or more of sugar and other sweeteners per 100ml	AED 1.09 per litre
Sweetened drinks, 5g or more but under 8g per 100ml	AED 0.79 per litre
Sweetened drinks, under 5g per 100ml	AED 0 per litre
Sweetened drinks with only artificial sweeteners, or artificial sweeteners plus under 5g	AED 0 per litre

Source: Article 10, Cabinet Decision No. 197 of 2025, as published by the UAE Ministry of Finance. Last verified 4 August 2026.

Two operational consequences are worth flagging for anyone importing drinks into the UAE. Article 13(4) provides that where a person does not submit a laboratory report the Federal Tax Authority accepts, proving the quantity of sugar and other sweeteners, the drink is taxed at the highest band until a report proves otherwise. And Article 10(3) counts naturally occurring sugar toward the total wherever added sugar or other sweeteners are also present, so a juice with a small amount of added sweetener is measured on its whole sugar content, not just the added part. The penalty side of the regime is covered in our guide to excise tax penalties in the UAE, and the compliance work sits with our excise tax service.

Excise across the rest of the Gulf

Saudi Arabia, Bahrain, Oman and Qatar have each implemented excise regimes under the GCC Common Excise Tax Agreement, ratified in the UAE by Federal Decree No. 32 of 2017. Kuwait has not implemented one. Rates and covered categories were broadly aligned at launch and have drifted since — the UAE’s 2026 restructuring is the clearest example, and we have not verified the current per-state position with each authority for this update. If you are pricing excise goods into a Gulf market, get the current schedule from that state’s authority before you set a landed cost.

Customs runs on the GCC common tariff, with a 5% standard duty on most goods entering the bloc and free circulation in principle once cleared at the point of entry. In practice, documentation and origin rules mean the theory and the freight reality often differ.

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The rates in this region are still low by world standards. The compliance stopped being low several years ago, and that is the part that generates the penalties.

UAE penalties after Cabinet Decision No. 129 of 2025

If a UAE business gets one thing from a regional comparison, make it this. The penalty schedule appended to Cabinet Decision No. 40 of 2017 was amended by Cabinet Decision No. 129 of 2025, issued 9 October 2025 and effective 14 April 2026. These are the current figures.

Violation	Administrative penalty
Failure to keep the required records	AED 10,000; AED 20,000 on repetition within 24 months
Failure to submit records and documents in Arabic when requested	AED 5,000
Late tax registration application	AED 10,000
Late deregistration application	AED 1,000 monthly, capped at AED 10,000
Failure to notify the FTA of changes to the tax record	AED 1,000; AED 5,000 on repetition within 24 months
Late tax return	AED 1,000 first time; AED 2,000 on repetition within 24 months
Late payment of payable tax	14% per annum, monthly, on the unsettled amount
Incorrect tax return	AED 500, unless corrected within the return deadline
Voluntary disclosure of an error	1% per month on the tax difference
Failure to disclose before an audit notification	Fixed 15% of the tax difference, plus 1% per month
Failure to facilitate the tax auditor	AED 20,000
Failure to calculate tax due on import	50% of the unpaid or undeclared tax

Source: Tables 1 and 3 appended to Cabinet Decision No. 40 of 2017 and its amendments, as published by the UAE Ministry of Finance. Last verified 4 August 2026.

The VAT-specific table carries its own line items, and one of them is new enough to be worth naming. Failure to comply with the conditions and procedures for issuing a tax invoice and a tax credit note electronically now attracts AED 2,500 for each detected case. Failing to issue a tax invoice or a tax credit note at all in the legally specified period is also AED 2,500 per detected case, down from the previous figure. Displaying prices exclusive of tax remains AED 5,000.

Corporate tax penalties are a separate schedule

Corporate tax has its own penalty decision, and confusing the two produces bad estimates. Cabinet Decision No. 75 of 2023, effective 1 August 2023 and amended by Cabinet Decision No. 10 of 2024, governs violations of Federal Decree-Law No. 47 of 2022.

Corporate tax violation	Administrative penalty
Late corporate tax registration application	AED 10,000
Late corporate tax return	AED 500 per month for the first twelve months, then AED 1,000 per month
Late payment of payable corporate tax	14% per annum, monthly, on the unsettled amount
Incorrect return	AED 500, unless corrected before the return deadline
Failure to keep the required records	AED 10,000; AED 20,000 on repetition within 24 months
Voluntary disclosure of an error	1% per month on the tax difference
Failure to disclose before an audit notification	Fixed 15%, plus 1% per month
Failure to facilitate the tax auditor	AED 20,000

Source: the table appended to Cabinet Decision No. 75 of 2023 and its amendments, as published by the UAE Ministry of Finance. Last verified 4 August 2026.

Notice the asymmetry with VAT. A late VAT return costs AED 1,000 as a one-off. A late corporate tax return costs AED 500 every month and then AED 1,000 every month from the thirteenth. A corporate tax return that is eighteen months late has run up AED 12,000 in filing penalties alone, before anything is said about the tax.

A worked example: a Dubai trading company selling into three Gulf markets

Take a mainland Dubai company with AED 12 million of annual revenue. It sells electronics, sources from Asia, and ships to customers in the UAE, Saudi Arabia and Bahrain. Here is where each rule lands.

UAE VAT. Revenue is far above AED 375,000, so registration is mandatory. Domestic sales carry 5%. Exports of goods can be zero-rated where the conditions in the VAT Executive Regulation are met, which include physical export within 90 days of the supply and retention of a customs declaration with commercial evidence, or a shipping certificate with official evidence. Zero-rating is an evidence position, not a destination position — no evidence, no zero rate.

UAE corporate tax. Revenue of AED 12 million rules out Small Business Relief. Taxable income above AED 375,000 is taxed at 9%. On, say, AED 1.4 million of taxable income the charge is 9% of AED 1,025,000, or AED 92,250. Revenue is below AED 50 million, so audited financial statements are not required by Ministerial Decision No. 84 of 2025 — though a bank or a free zone landlord may want them anyway.

Saudi flows. Import VAT at 15% arises on entry into the Kingdom and is normally the importer of record’s cost. Whether the customer or the Dubai company is the importer of record is a commercial decision with a cash-flow consequence, and it needs settling before the first shipment, not after.

Bahrain flows. VAT at 10% arises on entry. If the company also supplies services or digital products into Bahrain, the position is separate from the goods position and may bring the BHD 37,500 threshold into play.

Transfer pricing. If the Dubai company transacts with a related party, Article 34 of Federal Decree-Law No. 47 of 2022 requires arm’s-length results. Master file and local file are not required at this size — the thresholds in Ministerial Decision No. 97 of 2023 are AED 200 million of own revenue or AED 3.15 billion of consolidated MNE group revenue — but the arm’s-length obligation itself has no threshold, and the return still asks the disclosure questions.

Registration works differently for each UAE tax

People assume one registration event covers everything. It does not, and the differences drive the two most expensive UAE penalties an SME can collect.

UAE tax	Trigger for registration	Threshold
VAT	Taxable supplies, imports or expenses over the previous 12 months, or expected in the next 30 days	AED 375,000 mandatory, AED 187,500 voluntary
Corporate tax	Being a taxable person under Federal Decree-Law No. 47 of 2022	No revenue threshold for the registration obligation itself
Excise tax	Importing, producing or stockpiling excise goods, or running an excise warehouse or designated zone	No registration threshold at all

VAT thresholds: Federal Tax Authority. Excise: u.ae states there is no registration threshold for excise tax. Last verified 4 August 2026.

The excise line surprises people most. There is no de minimis. A company that imports a single pallet of energy drinks is in the same registration position as a national distributor, and the late-registration penalty is AED 10,000 either way. Corporate tax works on the same logic for a different reason: the obligation attaches to being a taxable person, not to earning a profit, so a loss-making or dormant company still has a registration to manage.

The compliance calendar a regional UAE business actually runs

Obligation	Frequency	Deadline
UAE VAT return and payment	Quarterly for the standard tax period	28th day following the end of the tax period
UAE excise tax return	Monthly	15th day following the end of the tax period
UAE corporate tax return and payment	Annual	9 months after the end of the tax period
Notify the FTA of changes to the tax record	As they occur	Within the period the FTA specifies
Records retention	Continuous	Per the Tax Procedures Law and each tax law

UAE VAT deadline: Article 64, Cabinet Decision No. 52 of 2017. Excise filing date: u.ae. Last verified 4 August 2026.

The VAT deadline deserves one clarification because it costs money regularly. Article 64 requires both the return and the payable tax to reach the Federal Tax Authority by the 28th day. Filing on the 28th and paying on the 29th is a late payment, and late payment now runs at 14% per annum from the day after the due date. Our guide on how to pay VAT in the UAE covers the payment channels and the settlement timing that catches people out.

What goes wrong, and roughly when

Cross-border Gulf trade fails in a small number of repeatable ways. None of them are exotic.

• Assuming the UAE threshold travels. A business tracks AED 375,000 carefully and never checks whether it has crossed SAR 375,000 or BHD 37,500 in the markets it also sells into.
• Zero-rating an export without the evidence. The goods left, everyone knows the goods left, and there is no customs declaration on file. The FTA does not accept “everyone knows”.
• Getting the importer of record wrong. The Dubai company assumes the customer will clear the goods; the customer assumes the opposite; the shipment sits and the 15% or 10% falls on whoever blinks.
• Treating services like goods. Goods follow movement. Services follow place-of-supply rules, and electronic services follow their own rules again.
• Filing on time and paying late. The single most common self-inflicted UAE penalty, and now compounding at 14% per annum.
• Losing Small Business Relief without noticing. Revenue crosses AED 3 million once, and the relief is gone for every later period regardless of what revenue does afterwards.

What triggers an obligation in another Gulf state

The useful mental model is not “which countries do we sell to” but “which of our flows crosses a line that changes who accounts for the tax”. These are the lines that matter most often.

Flow	What usually decides the answer	Where it lands
Goods shipped from the UAE to a GCC customer	Who is the importer of record, and whether the export evidence exists	Import VAT in the destination state; UAE zero rate only with evidence
Services supplied to a GCC business customer	Place-of-supply rules and the customer’s registration status	Often a reverse charge on the customer, sometimes a local registration
Electronic or digital services to consumers	The consumer’s location and the destination state’s non-resident rules	Can force a foreign registration with no local presence
Goods moved into a UAE Designated Zone	Whether the movement is treated as an export at all	Not an export of those goods under the UAE Executive Regulation
Payments to a related party in another state	Arm’s-length pricing and documentation	UAE corporate tax adjustment risk, plus the other state’s own rules
Staff seconded across a border	Where the work is performed and for how long	Permanent establishment and payroll questions in the host state

General orientation only, prepared 4 August 2026. Each line has exceptions in the underlying legislation of every state involved.

The two that generate the most avoidable cost are the first and the third. Export zero-rating fails on evidence far more often than on principle, and digital services quietly create foreign registrations for companies that have never set foot in the market.

Related-party transactions across a Gulf group

If your Gulf presence involves more than one entity, the transfer pricing rules stop being theoretical. Article 35 of Federal Decree-Law No. 47 of 2022 defines related parties, and the bar is lower than most owner-managers expect: natural persons related within the fourth degree of kinship, a 50% ownership interest held directly or indirectly, or Control — which includes the ability to exercise 50% of voting rights, determine 50% of the board, receive 50% of profits, or exercise significant influence over the business and its affairs.

Article 36 then covers connected persons: an owner of the taxable person, a director or officer, and related parties of either. A payment or benefit to a connected person is deductible only to the extent it matches market value and is incurred wholly and exclusively for the business. That is the rule that catches owner salaries in a family group. The reporting side is set out in our guide to related party disclosure for UAE corporate tax.

Three profiles, three different answers

The same regional footprint produces very different obligations depending on size and structure. These are the three shapes we see most.

	SME, UAE only	SME, UAE plus one Gulf market	Group with UAE and foreign entities
UAE VAT registration	Mandatory above AED 375,000	Mandatory, plus export evidence discipline	Mandatory, plus intra-group supply mapping
Foreign VAT registration	None	Possible, driven by that state’s threshold and rules	Likely in more than one state
Small Business Relief	Available at or below AED 3m revenue	Available on the same test	Unavailable if in an MNE group
Audited financial statements	Only above AED 50m revenue, or if a QFZP	Same test	Same test, plus special purpose accounts for a tax group
Transfer pricing documentation	Arm’s-length rule applies, no master or local file	Same	Master and local file at AED 200m own revenue or AED 3.15bn group revenue
Related party disclosure in the return	Only if thresholds are crossed	Usually yes for cross-border flows	Almost certainly yes

UAE positions per Federal Decree-Law No. 47 of 2022 and Ministerial Decisions No. 73 of 2023, 84 of 2025 and 97 of 2023. Last verified 4 August 2026. Foreign positions depend on the state involved.

The middle column is where most UAE SMEs actually sit and where the least guidance exists. You are too small for master file and local file, too small for a statutory audit under the corporate tax rules, and yet exposed to a foreign VAT registration the moment a Saudi or Bahraini flow crosses that state’s threshold.

Choosing where a Gulf holding company sits

We get this question constantly, usually phrased as “which GCC country is best for tax”. It is the wrong question, and headline rates are the least useful input into the right one.

What actually decides the answer is where your people and decision-making sit, whether the income you earn qualifies for any preferential regime in the state you pick, what the treaty network does to the specific flows you make, and whether you can evidence any of it if a tax authority asks two years later. A structure that looks efficient on a rate table and cannot survive a substance question is worse than no structure at all, because you paid to build it and you will pay again to unwind it.

Where Velmont Crest fits in

We are a UAE practice and the UAE leg is where we work directly: corporate tax registration, computation and filing, VAT returns and reviews, excise compliance, and the qualifying-income analysis that decides whether a free zone company’s 0% is real or assumed. Our work is advisory and preparatory — we are not a registered tax agent and we do not represent clients before the Federal Tax Authority, and we say so up front rather than letting anyone assume otherwise.

For businesses trading across the Gulf, what we can do is map the touchpoints: where a foreign VAT registration looks likely, where a contract term will decide who funds import VAT, where a related-party flow needs documenting before it becomes a disclosure question. Where a formal foreign filing arises, we coordinate with advisers licensed in that jurisdiction rather than pretending one UAE licence covers six countries. If you want a second opinion on where you stand, our note on choosing a tax consultant in Dubai sets out the questions worth asking before you appoint anyone, and you can request a quote through the contact page.