Note: This story has been corrected to reflect that few expats would leave Qatar in the event of a 5 percent VAT.
Only some 13 percent of expats recently surveyed said they would likely leave Qatar after it imposes a 5 percent value-added tax (VAT) in 2018.
Meanwhile, for Qataris, the potential reduction of state benefits proved to be more of a concern than a VAT.
The tax is expected to take effect as part of a GCC-wide agreement amid lower global oil prices and budget deficits.
The findings of the survey were presented yesterday by Qatar University’s Social and Economic Survey Research Institute (SESRI).
The lecture was titled, “Public Acceptance of Taxation in Qatar: How will citizens and expatriates respond to new revenue-generating measures?”
Survey results
To arrive at its findings, SESRI interviewed some 1,609 people, 812 of whom were Qatari and 797 were high and middle-income expats.
Some 13 percent said they would likely leave in the event of a 5 percent tax. Of those, 27 percent of Westerners were more likely to think about leaving.
Meanwhile, some 18 percent of Asian expats said they would consider leaving, while only 5 percent of Arabs expressed this sentiment.
However, if the VAT was increased to 10 percent, then 46 percent of Western expats said they would think about leaving Qatar.
According to one of the study’s researchers, a VAT would be preferable to income and corporate taxes. However, it would still raise the cost of living in Qatar.
Can Qatar continue to attract expats while introducing taxation in the country? Dr. Michael Ewers discusses this using survey findings pic.twitter.com/fxoDlQvpYh
— SESRI (@SESRI_QU) November 24, 2016
“The higher they (expats) are attracted to stability and security, and lack of taxation, the more they’re likely to leave if these are not there anymore,” said researcher and senior policy analyst Michael Ewers.
“After the oil price crash, there has been a focus on cutting by the government, companies rightsizing their workforce and definitely fear among the expat community,” he added.
In addition to new taxes, the region is growing more unstable, making Qatar an even less attractive place to live for some.
Subsidies more important
Meanwhile, citizens of Qatar expressed more concern about subsidy cuts.
In January, SESRI asked Qataris to prioritize the state benefits they’d like to keep amid government efforts to reduce spending.
Free education, healthcare, water and electricity, and public sector employment were deemed high on the priority list.
Other benefits, such as free housing, land allotment, no taxation and social and marriage allowances were not considered as important.
“For them, they care more about keeping these benefits than they are with the introduction of a VAT,” Ewers said.
No transparency
Despite some efforts in the private sector to raise awareness about the impending VAT, Qatari officials have so far done little to convey its significance to the public.
During yesterday’s lecture, audience members said they were unaware about what kind of goods and services would be taxed.
Previously, analysts said the consumption tax is expected to exempt certain food items, the cost of education, healthcare and social services.
According to Ewers, many people are also in the dark about how Qatar’s finances were affected by lower oil prices.
“There’s a lack of knowledge on this among people in the public sector, and it’s unfortunate because they’re the ones who have a lot to lose,” he said.
An audience member suggested that a parliamentary body be formed to represent the population as the VAT is rolled out.
“It’s also important to raise the question of transparency. People need to know where their money is going and how will it be spent,” one person said.
Thoughts?
