World Cup host Qatar demurs on VAT, will wait for ‘right time’

Qatar, one of only two Arab economies in the Gulf region without value-added tax, will likely wait longer before imposing the levy.

“We will look to the right time to apply such taxes,” Finance Minister Ali Al Kuwari said in an interview on Wednesday with Bloomberg Television at the Qatar Economic Forum in Doha. “Tax reforms are part of our plans.”

More than half a decade since signing an agreement with neighbouring states that requires all six members of the Gulf Cooperation Council to introduce VAT, Qatar and Kuwait are alone in not following through. By contrast, Saudi Arabia already tripled its VAT rate to 15 per cent in 2020 to bolster state revenue.

Last year, Al Kuwari said his country hasn’t yet chosen when to go ahead and was wary of adding an extra burden on consumers in the midst of the pandemic. A KPMG report earlier this year said Qatar was expected to impose a VAT regime at a rate of 5 per cent during 2022.

One reason the approach is lacking in urgency is that the gas-rich nation is among the biggest beneficiaries from higher energy prices and is on track to run a large budget surplus. While cost pressures are muted in the region, inflation is picking up in Qatar, the host of this fall’s soccer World Cup.

Al Kuwari said Qatar isn’t isolated from global tailwinds including price pressures, warning that results may not be too favourable “when you apply taxes in such inflationary cycles.”