Bahrain consumer spending to drop, inflation to rise post VAT

Published on Friday, 31 August , 2018 100 Views

Business

#Bahrain #Saudi Arabia

Consumer spending will dip and price inflation will rise in the immediate aftermath of the introduction of value added taxation (VAT) in Bahrain, according to the head of consultancy EY’s VAT advisory services.

Speaking to Bahrain-based Gulf Daily News, EY’s top regional VAT consultant David Stevens said the period before and after the implementation in 2019 would mimic how VAT affected economies in the UAE and Saudi Arabia.

UAE, KSA, Kuwait to Enhance Bahrain Fiscal Stability

The Ministers of Finance of the Kingdom of Saudi Arabia, the United Arab Emirates, the State of Kuwait…

Decline in spending post implementation will come about as a result of increases in prices, according to Stevens.

“From what we have observed in Saudi Arabia and the UAE, there is likely to be a pull forward of some discretionary spending ahead of the VAT commencement date that will then see a decline in such spending after the tax is introduced,” he said.

Saudi Arabia and the UAE were the first two countries to introduce VAT among Gulf countries on January 1, 2018 at a rate of 5%.

The tax, levied on goods and services at each point of sale, was also to be introduced in Oman, Bahrain and Kuwait.

However, Bahrain and Oman opted to delay introduction to 2019, while Kuwait is reportedly mulling implementation in 2021.

Bahrain will introduce VAT at the same rate, which will allow any impact on the economy to be “modest and short-term in nature,” said Stevens.

Sectors that VAT will be levied on are yet to be confirmed, he added, however it’s grow Bahrain’s revenues by up to 2% of the country’s GDP.

Bahrain to Implement VAT in 2019

Bahrain will be the next country to implement five per cent value-added tax (VAT) after the UAE and…

Keywords: Bahrain Saudi Arabia
Category Business | 2018/08/31 latest update at 5:00 PM
Source : Arabian Business | Photocredit : Google

101 Views
Comments Add comment

The Smile Initiative: helping sick children in...

The E/O: Natalie Duran (Rock Climbing)

Bahrain a modern and beautiful country

The editorial staff of Bahrain Today would like to give all of its readers from Gulf and Bahrain and the whole world the opportunity to participate actively in the development of the website! If you have something interesting, fun, scandalous - just something worth to be seen from more people. Capture it and share it in the Bahrain Today with a short text.

Do you have information you want to reach our readers?

Send article/s

You can subscribe to our Facebook, Twitter and Google pages or use our RSS feed channel to always read the most important news about Bahrain, the Gulf and the world.