'Sin Taxes' Emerge in Gulf States

    Jan 31, 2018 @ 12:41 PM / by Morgan Grenier

    Saudi Arabia, Riyadh 11 - OT-830741-edited.jpg

    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.

    AIRINC's Data Points: Your Global Mobility News

    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.

    This quarter's cost of living surveys were conducted primarily in Europe, Asia and mainland Southeast Asia. Click below to access our quarterly release now:

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    Topics: International Tax, Data Points, Data and Infographics, Saudi Arabia, United Arab Emirates

    Morgan Grenier

    Written by Morgan Grenier

    Morgan graduated with a BA in Communications and Journalism from Simmons College, where she received a Gold Medal from the Columbia Scholastic Press Association. She joined AIRINC in 2016 as a Goods and Services Analyst. In this role, she aids in the quarterly analysis of survey data and evaluates hardship for AIRINC’s Hardship Database.