5% VAT Levied on "Harmful" Products
During negotiations for a 5% VAT, member states of the Gulf Cooperation Council (GCC) also agreed to impose steep excise taxes on products deemed “harmful to human health and the environment,” including sugary drinks and cigarettes.
Cigarettes and Sugary Drinks Show Significant Price Increases
Saudi Arabia was the first to enact a new tax in June, followed by the UAE in October. Cigarettes and sugary drinks saw significant price increases. Both countries rolled out the new VAT on January 1. The remaining GCC member states of Oman, Bahrain, Kuwait, and Qatar are expected to enact similar excise taxes in 2018, although they may also include alcohol and luxury goods. These countries are expected to follow the lead of Saudi Arabia and the UAE by implementing the VAT by the beginning of 2019.
A Global Readiness to Tax
The GCC isn’t alone in searching for new ways to raise revenue and curb behavior—similar excise taxes have been enacted worldwide, from Indonesia to some counties in the US, and there are more on the horizon. In contrast to larger overall tax changes such as the VAT in the GCC or GST in India, however, these changes may have low overall impact on cost of living. AIRINC will survey all GCC states on-site in February 2018.
Want to learn more? The above excerpt is taken from Data Points, AIRINC's quarterly newsletter. Data Points brings you the latest updates from our Housing, Goods & Services, and Tax departments based on our expert international surveys, which are conducted by our global data collection team on-location.
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