Global

Details

  • Service: Tax
  • Type: Business and industry issue
  • Date: 1/23/2014

GCC to sign new free trade agreement with Singapore 

The GCC – which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates –appears ready to sign a comprehensive new free trade agreement (FTA) with Singapore in early 2014. The FTA will cover trade in goods and services, investments, rules of origin, customs procedures, government procurement, electronic commerce and economic cooperation. It is expected to enter into force retrospectively from 1 September 2013.

Currently, the standard customs duty rate applicable in the GCC is 5 percent. Under the FTA, the GCC is expected to eliminate about 99 percent of customs duties applicable to Singaporean products (95 percent of the products on entry into force and the remainder by 2018). Similarly, Singapore is expected to eliminate all customs duties applied to goods that originate in GCC member states.


To qualify for preferential tariff treatment, the goods would be required to comply with the rules of origin requirements in Singapore and the GCC and the direct consignment rule is expected to apply. Under this rule, the product must be transported directly from the place of production to its preferential destination.


For FTA purposes, it is likely that goods would be deemed to originate in Singapore or in a GCC country where they are wholly obtained or produced in the territory of the exporting country or where they have undergone sufficient processing in the exporting country; in other words, a minimum added value of 35 percent would apply. However, some products are expected to have specific rules of origin based on criteria other than the minimum 35 percent added value1.



1IBFD and Discussions with the Ministry of Economy in the UAE on the timelines.

 

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