Jan 30 2012
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Qatar weighs value-added tax proposal
The idea is to take up the long-term challenge of broadening the revenue base and reduce the non-hydrocarbon deficit (which is the overall surplus excluding hydrocarbon revenues).
Backed by a large increase in hydrocarbon revenues, Qatar is expected to post huge surpluses in 2011 as well as this year, raising the share of hydrocarbon income in the total state revenue.
The trend, thus, underlines the need to diversify the state revenue sources, the GSDP hinted.
"It would be advisable to bring bigger companies with large profits within the net of VAT and spare smaller players," said investor and financial analyst, Abdullah Al Khater.
He said there have been discussions in the past as well to levy some kind of tax on private companies, so VAT isn't a totally new idea.
Al Khater, though, warned that one of the adverse impacts of imposing VAT could be on inflation as prices would zoom further.
"Companies would pay up VAT but they would eventually make the end-user cough up extra so that their profitability is not affected," he said in remarks to this newspaper yesterday.
The GSDP has, meanwhile, said that inflation is likely to be low this year--much like 2011--and severely criticized local 'monopolistic trading practices' as being one of the sources of upward price pressures.
"They (monopolies) drive a significant wedge between the prices of some goods on international markets and those for consumers in Qatar," said the planning secretariat. Put in simple words, the secretariat drubbed the monopolies (local dealerships of branded foreign goods or services) for charging more for the commodities and services marketed by them locally than their rates prevailing elsewhere in the world. The GSDP said that when the pay packages of Qatari public servants were raised late last year there was the risk of these traders who enjoy market power raising prices.
But the government is alert to such risks and has set up a high-level committee to detect and act on unwarranted price rise, the planning secretariat said.
© The Peninsula 2012
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