The Gulf Cooperation Council (GCC) is set to modernize its regional tax framework, with Bahrain’s parliament debating a key amendment to the GCC Unified Selective Tax Agreement. The proposed changes introduce more flexible excise tax rules and aim to strengthen economic integration among member states.
Quick Facts
- New flexible excise tax calculation methods.
- Tax on sweetened drinks linked to sugar content.
- Greater autonomy for member states on implementation.
- Retail price for tax calculation will exclude VAT.
A Shift Towards Flexibility
At the core of the amendment is a new mechanism for calculating excise tax. Under the updated framework, GCC states can apply tax as a percentage of value, a fixed amount per unit, or a hybrid model combining both. This move gives governments more adaptable tools to respond to economic shifts and national priorities.
The agreement also clarifies that the retail price used for tax calculations will exclude both Value-Added Tax (VAT) and the excise tax itself. This technical adjustment is designed to improve pricing transparency and consistency across the region.
“This amendment enhances the efficiency of the GCC tax system while ensuring consistency across member states,” said MP Ahmed Al Salloom, chairman of the financial and economic affairs committee. “It also provides the necessary flexibility for governments to respond to public health priorities and economic developments.”
Targeting Public Health
One of the most significant policy updates targets sweetened beverages. Taxation will increasingly be linked directly to sugar content rather than a simple fixed percentage model.
According to Bahrain’s Finance and National Economy Ministry and the National Bureau for Revenue, this change aligns with World Health Organisation (WHO) recommendations to curb sugar consumption and improve public health. This signals a strategic use of fiscal policy to address health-related challenges in the region.
Harmonizing a Regional Market
The amendment is part of a broader push to ensure tax frameworks across the GCC remain aligned with evolving regional and international standards. By giving member states greater autonomy in determining payment timelines and collection procedures, the agreement allows for tailored domestic implementation while maintaining a unified structure.
Al Salloom emphasized the strategic nature of the update. “We are moving toward a more advanced and adaptable tax structure that supports economic integration within the GCC while allowing each state to tailor implementation based on its national priorities,” he stated.
Officials confirmed that implementing the new rules will require updates to national procedures and coordination between authorities like the Central Bank of Bahrain (CBB) and the National Bureau for Revenue. The reform is expected to support both fiscal sustainability and public health goals.
About The GCC Unified Selective Tax Agreement
The GCC Unified Selective Tax Agreement, which Bahrain joined in 2017, establishes a framework for applying excise taxes on specific goods, typically those deemed harmful to public health or the environment. The agreement aims to harmonize tax policies across member states to ensure fair competition, reduce market distortions, and support long-term economic stability in the region.
Source: Zawya
