Six Gulf states will start taxing people for the first time

The Gulf Cooperation Council has agreed to introduce VAT following costly military campaigns and a drop in global oil prices

The Burj Al Arab in Dubai, United Arab Emirates (KARIM SAHIB/AFP/Getty Images)

Six Gulf states have said they will tax their citizens for the first time in a radical policy shift.

The Gulf Cooperation Council (GCC) - a loose fedration of Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and the United Arab Emirates - has agreed to introduce VAT following costly military campaigns and a drop in global oil prices.

Saudi Arabia has withdrawn tens of billions of dollars from global investment funds in an attempt to reduce its budget deficit, The Times reports.

Despite this, it has pursued an aggressive foreign policy, supporting anti-government troops in Syria and spearheading an eight-month military campaign against Iran-backed rebels in Yemen.

Oil prices have dropped near $40 a barrel this week, the lowest since the financial crisis.

Taxation is considered an alternative source of income for Gulf states hoping to move their economies and populations away from a dependence on oil and gas.

The council announced a target to introduce VAT over the next three years. Healthcare, education, social services and 94 food items will be excluded.

To limit smuggling and competetiveness, the countries aim to introduce the tax at the same time.