Gulf states set date for introducing VAT

Market UpdateTax PlanningEconomics


The Gulf States have finally succumbed to raising taxes in a bid to repair their oil-ravaged finances. The six nations have agreed to introduce a value-added tax (VAT) on goods and services sometime in 2018.

The leaders and finance ministers have discussed implementing the tax for some time, but the plunging price of oil has at last forced them to agree on a strategy.

The VAT rate is expected to be 5% and will be charged across each of the countries, pushing up day to day prices in Saudi Arabia, the United Arab Emirates, Bahrain, Qatar, Kuwait and Oman.

However, inflation – or the lack of it – is affecting economies around the world.

South Africa in trouble

South Africa has jumped up the queue of economies in trouble. Finance minister Pravin Gordham has declared the country is in the grips of a financial crisis. High jobless rates, poverty, crime and corruption are pushing the economy towards the brink.

“The government quickly needs to take responsibility and look at fixing these problems,blackouts,” said the minister. “Some will take longer to sort out. Our schools are not working and productivity is suffering because we have no pool of skilled labour.

“We need investment to build roads and improve energy supplies. The country suffers from blackouts because we do not have effective power generation.”

Other governments in the region recognise that a failing South Africa is also a brake on their economies. The country has the largest GDP and economic influence over much of southern Africa.

This reflected in neighbours Namibia and Lesotho also seeing rising inflation.

Countries reporting inflation of more than 10%

CountryCPI %Last reportedTrendIMF 2016 forecast
Angola20.3Feb-16▲ Rising14.2
Argentina*14.3Oct-15▲ Rising25.6
Brazil10.4Feb-16▲ Rising6.3
Ethiopia10Jan-16▼ Falling9
Ghana18.5Feb-16► Stable10.1
Haiti13.3Jan-16▲ Rising8.9
Libya11.4Sep-15▲ Rising9.2
Malawi18.3Jan-16► Stable14
Moldova13.4Jan-16▲ Rising7.4
Mozambique12.2Feb-16▲ Rising5.6
Myanmar10.2Jul-15▲ Rising11.8
Nepal13.9Feb-16▲ Rising8
Nigeria12.2Feb-16▲ Rising9.7
Sierra Leone10.1Dec-15▲ Rising12.7
South Sudan202.5Feb-16▲ Rising14.4
Sudan12.9Feb-16▼ Falling12.8
Surinam25.2Jan-16▲ Rising4.3
Syria40.5Aug-15▲ Risingn/a
Ukraine40.3Jan-16▼ Falling14.2
Uruguay10.2Feb-16▲ Rising8.1
Venezuela180.9Dec-15▲ Rising204.1
Zambia22.9Feb-16▲ Rising7.5