As crude oil prices fall to multi-year lows and prospects of a recovery look increasingly bleak, experts say the time is "perfect" for Gulf countries to introduce taxes to diversify revenue streams and improve fiscal balances. 

The six-member Gulf Cooperation Council (GCC) are feeling the pressure for more than a year now due to cheaper oil prices that are adversely impacting their revenues, since oil exports constitute a major part of their earnings.

Last month, the International Monetary Fund (IMF) had said that Saudi Arabia, the world's largest crude oil exporter, could exhaust its financial assets over the next five years, if the government does not change its current policies in the wake of falling oil prices.

Bahrain and Oman, who are also among GCC members, are facing a similar situation, it said.

The GCC countries should take lower oil prices as an opportunity to expand their revenue sources, according to speakers at a panel discussion organised by the UAE branch of the Institute of Chartered Accountants in England and Wales (ICAEW).

Panelists agreed that the decline in oil prices is not a "disaster" for GCC countries as their reserves exceed $2.5 trillion and the countries have low levels of debt.

But they must "continue and accelerate" to broaden their revenue base to make their economies sustainable in the long-term.

Levying tax is the "best solution" for GCC countries compared to reducing subsidies or spending cuts, which are "difficult" to execute in the current scenario, according to panelists.

"There is growing international focus on taxation. Countries are looking for more information on multinational companies who are shifting their profits to countries with lower tax rates," quoted Michael Armstrong, ICAEW regional director for the Middle East, Africa and South Asia, as saying.

"Now is therefore a perfect time for GCC countries to start levying taxes. This will be in step with international trends and will also help to diversify revenues," Armstrong said.

A common tax framework has been under consideration by the GCC countries for the past 10 years and it is now in "final stages", said speakers at the panel discussion.

Introduction of value added tax (VAT) is feasible for the GCC countries and some form of it may be implemented in the near future, they said.

The introduction of VAT could contribute to 4-5% of gross domestic product (GDP) growth of a GCC member, panelists said.

The UAE and Oman are "mostly likely" to introduce VAT in the region, while Qatar is unlikely to impose taxes at this stage, they added.