Around 13% expats would likely leave Qatar if it imposes a 5% value-added tax (VAT) in 2018, according to a survey by Qatar University’s Social and Economic Survey Research Institute (SESRI).
VAT is expected to increase the cost of living in Qatar and other countries in the region. Around 18% of Asian expats said they would consider leaving the Qatar, while only 5% of Arabs expressed the same opinion, Doha News reported.
But if VAT is increased to 10%, then 46% of Western expats would think about leaving Qatar.
“After the oil price crash, there has been a focus on cutting by the government, companies rightsizing their workforce (which lead to) fear among the expat community,” said researcher and senior policy analyst Michael Ewers.
SESRI also asked Qataris to prioritize the state benefits they would like to keep amid government efforts to reduce spending.
A majority of those surveyed cited free education, healthcare, water and electricity, and public sector employment as the top priorities.
These were followed by other benefits such as free housing, land allotment, no taxation and social and marriage allowances.
SESRI interviewed 1,609 people, 812 of whom were Qatari and 797 were high and middle-income expats.
VAT is expected to come into effect as part of a GCC-wide agreement as countries in the region are battling lower global oil prices and budget deficits.
Last week, International Monetary Fund (IMF) said GCC countries should consider introducing a corporation tax on business profits as part of measures to boost non-oil revenue.
An overhaul of the taxation of business profits in the GCC, for instance, a 10-15% corporation tax, would contribute to improving non-oil tax revenue collection, according to an IMF policy paper.
Extending these taxes to domestic businesses – together with the planned introduction of other fiscal reforms such as value added tax by 2018 – would help GCC countries as they grapple with falling oil revenues and an uncertain global economy, it said.
This, together with the VAT and excises, will help ensure efficient and progressive tax systems in the region and generate the bulk of non-oil tax revenues for most countries’ budgets, according to the IMF.