value added tax (VAT), which is expected to be introduced throughout the GCC by 2018, is unlikely to be implemented in Qatar in the short term, many businessmen and industry experts have said.
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE have signed the agreement, paving the way for the introduction of VAT throughout the GCC in 2018. The next steps call for implementation of local laws to be agreed upon in each country.
"The implementation of VAT in Qatar depends on several factors like the fiscal policy, revenue streams and commodity prices. The recent budget announced by Qatar is quite comprehensive, and my opinion is that VAT might be deferred here to asses how it works out in countries of the region where it will be implemented soon," Doha Bank Chief Executive Officer R Seetharaman told Qatar Tribune on Sunday.
According to Seetharaman, the business environment in Qatar is very attractive and the country would like to maintain it further.
He said any decision to implement VAT in Qatar would depend on the economic situation and the need to generate more revenue streams.
On being asked when he expects VAT to be introduced in Qatar, the Doha Bank CEO said it would be difficult to give a time-frame for it but it has been deferred at the moment.
Echoing similar feelings, prominent Qatari investor, Yousif Mousa Abuhelaiqa said,"After the initial shock of the unjust blockade imposed on Qatar by the Saudi-led bloc, businesses in the country are doing well and therefore it would be better if we put off the implementation of VAT for at least six months or a year."
Abuhelaiqa said it would be better to wait and watch how the VAT system works in the neighbouring countries rather than rushing to implement it here.
The Qatari businessman said the country has good sources of revenues and for this reason VAT may not be an urgency in the immediate future.
He said it would be prudent to give businesses in the country more time to understand how VAT works as it is something very new to the region.
Abuhelaiqa said as of now the practice is most common in the West but is not without controversy. He said some people argue that VAT is essentially a regressive tax that places an increased economic strain and also adds bureaucratic burdens on businesses.
Prominent Indian businessman CV Rappai, who is the Director and Chief Executive Officer of Video Home and Electronic Centre, said,"Given the political situation prevailing in the region, my assessment is that the implementation of VAT in the country would take some more time."
Rappai said,"At the moment we have not received any intimation from the concerned ministry about any moves to introduce VAT here."
"To implement the VAT, all businesses will need to have ample time to comply with the system and that would require time and resources," he pointed out.