Selective tax on "harmful" goods, luxury items
February 15 2017 09:38 PM
Energy drinks and tobacco products
Energy drinks and tobacco products

Doha

The Cabinet has given its nod to a draft law on selective tax that will be imposed on goods considered harmful to humans and the environment as well as luxury items.

Among the items that are expected to become dearer when the tax is eventually imposed are soft and energy drinks as well as tobacco products, according to reports.

The draft law was prepared by the Ministry of Finance in accordance with a unified Gulf Co-operation Council (GCC) agreement for selective tax, and a GCC Supreme Council decision issued during its 37th session in Bahrain a couple of months ago, the official Qatar News Agency (QNA) reported.

The decision stipulates the uniform imposition of selective tax in the GCC countries in accordance with the schedule of goods and percentages set in the resolution.

Under the provisions of the draft law, selective tax will be imposed on “goods harmful to human health and environment, and luxury goods produced domestically or imported and set forth in the table attached to the law, and in accordance with the tax rates specific to it”, QNA said, noting that the Council of Ministers may issue a decision for an amendment to the mentioned list of goods and tax ratios.

“The draft law includes provisions concerning the maturity date of the selective tax, cases where selective goods are presented for consumption, the value of selective goods, persons in charge of application of the law, registration for tax purposes and recognition of and commitment to maintenance of accounting books and records regularly for recording the movement of selective goods, tax assessment on the basis of the recognition of tax and installed data, cases of suspension of tax and its recovery and exemption, and confidential information and financial sanctions,” the report added.

Selective tax is different and separate from value-added tax (VAT) of 5% that is to be implemented across the Gulf countries in 2018. According to some recent media reports, selective tax would be "heavy" in the GCC member states when it is effected.

Younis Haji al-Khoori, undersecretary at the UAE Ministry of Finance, was quoted as saying in a report that the “GCC states had reached an agreement to double the tax on tobacco products to 200%”. The Saudi Ministry of Finance had said selective tax was scheduled to be implemented in April this year.

According to an Emirati newspaper, al-Khoori said the GCC states had discussed doubling taxes on a number of selected goods at a meeting.

In its 2016 year-end note, the International Monetary Fund (IMF) said Qatar's plan to “implement excises on tobacco and sugary drinks” starting in 2017 in line with a GCC-wide agreement would yield additional revenue.

Also, Qatar’s Ministry of Development Planning and Statistics had observed in an official report last year that “the possibility of new taxes, such as a ‘sin tax’ (on items deemed harmful to individuals, like tobacco, fast foods and soft drinks), and the introduction of VAT in 2018 will nudge up Qatar’s consumer price inflation”.

Yesterday’s regular weekly Cabinet meeting was chaired by HE the Prime Minister Sheikh Abdullah bin Nasser bin Khalifa al-Thani at the Emiri Diwan.



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