Economists and specialists in the tourism sector confirmed that postponing the implementation of the value-added tax (VAT) in the State of Qatar until now is a positive decision for the private sector and enhances the growth of the tourism sector, especially in light of the global economic challenges of high inflation rates, interest rates, and the negative effects left by the pandemic crisis. “Covid-19,” which contributed to creating a favorable business environment that contributes to enhancing growth and innovation in the country, noting that it is a smart strategy to enhance investment attractiveness and support the tourism sector at the present time.
They said in statements to Al-Arab that the decision to postpone is a positive and necessary step at the same time to help the economic sectors in the country, as well as small and medium-sized companies, adapt to the difficult circumstances, and thus enable them to continue their commercial activities without the additional financial burden that the tax may cause. Postponing the implementation of the tax also contributes to enhancing investor confidence, helps maintain the stability of the local market in the current period, and enhances the state’s vision of supporting the growth of the tourism sector.
Economist Dr. Hashim Al-Sayed said that the State of Qatar is working to enhance the business environment, through legislation and incentives. It also facilitates investment procedures, provides various services to investors, and creates a favorable business environment that contributes to promoting growth and innovation. These efforts would play a pivotal role in making the State of Qatar occupy an advanced position as an attractive environment for investment, meeting foreign investment goals, and opening more areas for investors.
Dr. confirmed. Hashem Al-Sayed said that not implementing the value-added tax in the State of Qatar compared to neighboring countries enhances the state’s efforts in providing a stimulating environment for investment and supports the strategy of attracting investments and reviving markets. Also, not implementing the tax so far gives the State of Qatar a competitive advantage in attracting more visitors and tourists, which is in line with With the state’s goals of diversifying sources of income and promoting the tourism sector as an essential resource for the national economy and achieving sustainable development.
Achieving economic development
Dr. explained. Hashem Al-Sayed, given the nature of the value-added tax and that it is an indirect tax imposed on all goods and services that are purchased and sold by establishments, and this tax is imposed at every stage of the supply chain, starting from import or production, through distribution, until the stage of final sale of the good or Service, pointing out that value-added tax is applied in more than 160 countries around the world, and although it is considered an essential source for strengthening countries’ budgets and contributes to financing public services and infrastructure and achieving the country’s economic development, it is often accused of being a tax. blind and unfair; Because it does not take income differences between consumers into account. The value-added tax is charged at every stage of production and distribution, which increases the cost of goods and services to the final consumer. Due to the increase in taxes on goods and services, prices usually rise, which negatively affects the purchasing power of consumers and this may lead to a reduction in demand for some goods. goods and services, thus causing a negative impact on the overall economy.
Attracting investments
For his part, academic and economic expert Dr. Abdul Rahim Al-Hoor said that value-added tax is considered one of the financial tools used by many countries to achieve additional government revenues and achieve economic stability. However, the failure to implement this tax in Qatar compared to neighboring countries such as the Emirates and Saudi Arabia may give Doha a competitive advantage in Attracting investments. Investors are always looking for investment environments that provide them with lower operating costs. Therefore, the absence of tax can be a strong attraction for foreign companies, attracting more investments in various sectors, including the hotel sector and tourism infrastructure.
Tourism sector recovery
Dr. added. Al-Hoor said not implementing the tax is also a competitive advantage for the tourism sector, and not imposing it could make Qatar a more attractive destination for visitors and tourists. He said: “Tourists usually look for destinations where costs are reasonable, and the absence of a tax can lead to reducing the overall costs of travel and accommodation, which can contribute to increasing the number of tourists and enhance the recovery of the tourism sector.”
He continued: “As for the current global economic situation, high interest rates and high inflation make it important for governments to consider the consequences of imposing additional taxes on the local economy. In the case of Qatar, it may be wise to postpone the introduction of VAT under the current circumstances to maintain a competitive advantage and attract more investments and tourists. At the same time, the government must balance the need for additional revenues with the consequences of taxation on economic growth.”
Dr. confirmed. Abdul Rahim Al-Hoor said that not implementing value-added tax in Qatar could be a smart strategy to enhance investment attractiveness and support the tourism sector at the present time. However, the government must monitor the global and local economic situation and make decisions that ensure the sustainability of economic growth in the long term.
Promoting economic growth
In this context, tourism expert Mr. Ayman Al-Qudwa confirmed that postponing the implementation of value-added tax in the State of Qatar compared to neighboring countries supports the strategy of attracting investments and reviving markets in a positive way, and has multiple impacts on the Qatari economy. Al-Qudwa said that the absence of value-added tax may make Qatar a more attractive destination for investors, as lower costs can lead to better returns on investment and thus stimulate business, as companies do not face an additional tax burden, which enhances the opportunities to expand their operations or start new projects, which in turn It enhances long-term economic activity and growth.
He also pointed out that this also contributes to improving the business environment, encourages local consumption and increases demand for goods and services, and also enhances Qatar’s competitiveness compared to neighboring countries, which contributes to attracting tourists and investors.
Multiple effects
Al-Qudwa also pointed out that not implementing the tax so far could give Qatar a certain competitive advantage in attracting more visitors and tourists, and it has multiple impacts on the tourism sector in the following aspects: Attracting tourists, as the absence of a value-added tax can make the prices of tourism services and products more attractive. Compared to other countries that impose this tax, which increases the number of arriving tourists.
He pointed out that tourists may be more inclined to spend more in a destination that does not impose additional taxes, which enhances revenues for the tourism sector, improves market competitiveness, which in turn supports the growth of leisure and business tourism, provides job opportunities, and promotes sustainable development of the sector.
Business development
Regarding the Qatari tourism and hospitality sector benefiting from this advantage in business development, Al-Qudwa said that this can be benefited from in multiple ways, including: enhancing marketing and promotion to make Qatar a preferred destination for tourists. Tourism institutions can also attract a larger number of local and international visitors, which facilitates competition with destinations. Other, in addition to stimulating tourism spending, the absence of a tax improves visitors’ experience, making them more inclined to spend more on activities and services, such as hotels, restaurants, and cultural events. Tourist establishments can also offer attractive travel packages that include accommodation and activities at competitive prices, attracting tourists looking for good value.
He continued: “Not imposing additional taxes could be an incentive to host international conferences and events, which contributes to enhancing economic activity and sustainability by operating businesses at a lower cost. The sector can also invest more in sustainability initiatives that contribute to improving Qatar’s image as a responsible tourist destination.”
Attract more tourists
Regarding the expectations of the 2024/2025 tourism season in the State of Qatar, especially with the number of visitors exceeding 4 million visitors by the end of October 2024, Al-Qidwa said that these expectations are more akin to ambitions, as there are several factors and positive indicators that may accelerate reaching 6 million visitors next year, most notably infrastructure. Tourism facilities, such as hotels, entertainment centers and the airport, contribute to attracting more tourists and providing better experiences, in addition to hosting large events, such as conferences, exhibitions and festivals, which can enhance the number of visitors.
Given these factors, it is very possible that Qatar will reach the goal of 6 million visitors in 2025 rather than in 2030. However, success in achieving this goal depends on several factors, including economic and political stability in the region, and global trends. In travel and tourism.
“Added value” in brief
Value Added Tax (VAT) is considered a modern tax tool that contributes to achieving sustainable development by expanding the government revenue base, without significantly affecting the purchasing power of citizens and residents.
This step is part of Qatar’s strategy to diversify government revenue sources away from oil and gas, which reflects its commitment to developing a sustainable and strong economy in the face of future challenges.
Some analysts believe that postponing the implementation of the value-added tax contributes to maintaining stable prices in the market, which reduces the living burdens on the population at the present time. With the postponement, prices in various sectors will remain the same, which contributes to preserving the purchasing power of consumers in light of unstable economic conditions.
In the same context, many experts confirm that timing is the main factor in the success of implementing the value-added tax. They believe that postponing implementation until a later time may give the government the opportunity to better assess the economic situation, and thus make better decisions on how to implement the tax in a way that suits the current circumstances. Postponing also allows for sufficient time to qualify companies and familiarize them with how to deal with the new tax system, which contributes to reducing any difficulties that may arise after implementation.
Based on different opinions, it can be said that postponing the implementation of value-added tax in Qatar was a necessary decision in light of the exceptional circumstances witnessed by the global economy. However, the biggest challenge remains in finding a balance between achieving financial sustainability through diversification in government revenue sources and supporting local economic growth and protecting the purchasing power of consumers.