Qatar’s Cabinet has approved the draft legislation to implement two new taxes.
A new selective tax on fast food, luxury goods and a 5 % value-added tax (VAT) aimed at businesses.
The taxes are part of GCC agreements that anticipate a boost of revenue for countries across the Gulf amid lower global oil prices.
The regulations had already been cleared by the Cabinet once. but got a second sign-off recently during their weekly meetings and after it was revised by the Advisory Council.
Officials formerly said that selective taxes would be imposed on goods harmful to human health and the environment, as well as specific luxury items; this includes alcohol, tobacco, energy drinks and soda amongst other things.
No date has been given for the implementation but the International Monetary Fund had previously said they would be rolled out this year and Saudi officials had hinted at an April deadline. However, this has since passed.
According to QNA, the draft legislation on selective taxes includes provisions on tax entitlement, the declaration of the loss or damage of selective goods, inspection of damaged goods, registration, tax declaration, rules of payment of tax in the case of local production, maintaining of accounting systems, the language of accounting records and control and inspection ruler.
VAT is expected to take effect sometime in 2018.
It is a consumption tax, but will exempt certain food items, as well as the cost of Education, Healthcare and Social Services.
Over the past several months, local businesses have been urged to prepare for the rollout of VAT because they will need to budget for lots of compliance costs.
Cost of Living
Though news of the taxes has not sparked much discontent within Qatar, the fees are likely to cause the cost of living to rise soon.
According to the International Monetary Fund, inflation will more than double from 2.6% currently to 5.7% by 2018.
One example of higher costs can be seen at the Qatar Distribution Co. (QDC).
The alcohol warehouse warned customers to stock up before import taxes on spirits double.
Additionally, eating out could also become costlier.