Qatar could see ‘sin tax’ once VAT is introduced

By RJ Whitehead

- Last updated on GMT

© iStock
© iStock

Related tags: Tax

Qatar could see the introduction of “sin taxes” as the government seeks new ways to fund spending over the next three years, according to a ministerial report.

The Ministry of Development Planning and Statistics said in addition to a 5% value-added tax, to be introduced in 2018 as part of a GCC-wide agreement, further taxes may also be introduced—including levies on alcohol and high-calorie food and drink. 

The possibility of new taxes, such as a sin tax [on items including tobacco, fast foods and soft drinks], and the introduction of the VAT in 2018 will nudge up Qatar’s consumer price inflation​,” the MDPS said in its six-monthly economic update.

Like other regional oil producers, Qatar has been seeing declining government revenues due to a dawdling recovery in oil prices, prompting policymakers to cut spending and search for new fiscal incomes.

GCC leaders voted to introduce VAT across member countries last month, with the first phase of implementation is expected to take place by the start of 2018, though this date is dependent on the release a framework agreement in October. 

Around 100 basic food items, which are currently exempt from customs duties, are expected to be free from the tax.

Elsewhere, Arab News ​has reported that Saudi Arabia is considering a proposal to impose a graded tax on carbonated drinks according to the percentage of sugar they contain.

Citing “informed sources​”, it said that the GCC secretariat would study the effect of this sugar tax, if it goes ahead, with a view to applying it across the bloc.

The same newspaper also said that PepsiCo has been considering reducing the calorie content of its drinks in the region’s markets in a bid to promote better health.

In a note to Saudi health authorities, the company also mooted the launch of consumer awareness campaigns to promote healthy consumption, as well as providing more information to consumers about drink ingredients.

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