Updated on July 19, 2022
Want to know more about the potential implementation of the VAT tax in Qatar? If so, read on.
Doha News conducts an investigation into this with the assistance of experts.
An agreement governing VAT implementation was agreed in 2017 by Gulf Cooperation Council members Saudi Arabia, Qatar, and the United Arab Emirates (VAT).
While Saudi Arabia and the UAE were the first to implement the adjustment in less than six months, the other GCC countries extended their deadlines even further.
Doha, according to Economist Intelligence Unit analyst Adnane Allouaji, couldn’t increase VAT because the blockade was already hurting Qatar’s economy.
Officials in Doha have said that the launch will take place in 2021, although no announcements have been made to that effect.
In the meantime, officials are arguing and discussing whether or not to implement VAT in late 2021 or early in the next year.
According to a partner at Ernst & Young in Qatar, It is a matter of whether or not, Ahmed Eldessouky said, rather than when.
“It would take years to make companies compliant and develop the infrastructure for implementation,” he remarked, despite progress on the tax legislation.
VAT tax rates can be implemented in a variety of ways using this framework.
First, the initial VAT rate is the lowest in the world at 5 percent. Despite this, Saudi Arabia plans to hike its VAT rate to 15% in July 2020.
A raise in VAT rates may be adopted in the near future but is unlikely, according to Allouaji, as governments do not want to hurt the wallets of their population.
Zero-rated taxes, or taxes that add no value, are common in the healthcare and education sectors. Customers of these services should be unaffected.
The tax may be exempt from some services, such as financial services. Finance companies’ ability to pass on the cost of VAT to clients may be affected.
The arrival of this new tax in an area where expats have been flocking for years in quest of tax reductions has residents in the Gulf region increasingly concerned.
According to analysts, the VAT’s early impacts are predicted to be disastrous. Customers may be rethinking their buying patterns as a result of increased prices, according to Aamer Bhatti, a Partner at EY.
A smooth transition is predicted, given the current economic prognosis for Qatar.
In the long run, more products and options will be available to customers as a result of the VAT, according to him, and discounts and promotions would be easier to come by.
Those in the public who are concerned about the possibility of a general income tax are divided.
When it comes to an expat-heavy country like Qatar, the idea of a general income tax is “implausible,” as Bhatti put it. According to the author, this is because expats see the tax-free income in Qatar and other Gulf governments as an incentive to relocate there. “