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Monday, May 17, 2021

IMF: Qatar is postponing new taxes on junk food and alcohol

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Photo for illustrative purposes only. Credit: tWo pInK pOSsuMs/Flickr

The introduction of new “selective taxes” on fast food, soda, tobacco, alcohol and certain luxury items in Qatar has been pushed back several months.

According to a new report from the International Monetary Fund (IMF), these taxes will now be rolled out sometime before the middle of next year.

It said:

“(Qatar’s) 2018 budget is expected to continue with gradual fiscal consolidation, focusing on the introduction of key tax policy and administration measures, including the introduction of a VAT and excises during the first half of 2018 and further rationalization of recurrent expenditures.”

A value-added tax, which will likely mostly affect businesses, had already been planned for 2018.

But sin taxes were previously expected to be rolled out this year.

The postponement comes amid a months-long Gulf dispute that has caused the price of food and transportation to rise in the country.

Managing well

Despite the increases, the IMF said this week that Qatar’s economy and financial markets are adjusting well to the “shock” of the rift with its neighbors.

It lauded the government’s efforts to avoid food shortages by diversifying sources of imports and boosting domestic production.

Turkish chicken. Credit: Al Meera

Following a recent visit to Qatar, the IMF also noted that key infrastructure projects appear to be on track since the country is sourcing construction materials elsewhere.

The vote of confidence from the IMF comes days after credit rating agency Fitch downgraded Qatar’s outlook amid fears of reduced government spending.

Earlier this week, Fitch put Qatar’s banks on Rating Watch Negative. It cited the “significant uncertainty around the banking system due to the boycott.”

It added that there doesn’t appear to be any resolution in sight.

Qatar Central Bank Governor Sheikh Abdulla Bin Saoud Al-Thani. Credit: QCB

For its part, Qatar’s Central Bank chief said the nation’s financial institutions are simply facing “abnormal conditions.”

Qatar’s banking system is strong and resilient, Sheikh Abdullah bin Saoud Al Thani said.

He added that the QCB believes its ratings will be back on solid footing in the “very near future.”

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