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Gulf states set to impose VAT on tobacco this year
BY SALAH ELDIN ELTAYEB

23 January 2005
DUBAI - Taxes on tabaccos and derivatives will be imposed by all the Arab Gulf Cooperation Council countries towards the end of the current year, according to a senior General Secretariat official familiar to the development.

Speaking to Khaleej Times, the source said," The matter was seriously discussed during the AGCC Economic and Financial Committee meeting in Jeddah recently. The tobacco issue dominated the debate. We unanimously agreed that there is an urgent need to curb the massive consumption of tobacco in the AGCC States.”

“There are many adverse social, economical and health problems caused by excessive consumption of the tobacco,” he said. The decision to levy a value added tax (VAT) on tobacco and other harmful products will definitely help improve social health conditions, he added.

"We are seriously weighing the proposal to impose taxes on all harmful products. The decision on tobacco has already been taken; there will be no review of the decision. We are ready to impose the taxes after we have collected all the needed data. We are just waiting for the AGCC tax and duty system to be streamlined and the newly imposed uniform five per cent duty to be implemented. I can't say when we will implement the taxes on tobacco. The issue is considered one of the most important for the current year. Nothing will delay the imposition of the new taxes, we were told to wait until the commissioning period of imposing the AGCC customs' unified tariffs is over. "

"We shall take the opportunity to further study the results of imposing such tariff, we are not in a hurry though we are ready to move. The AGCC Secretariat and its sub-committees always take much time, carefully studying every decision before its implementation,” he said. 

“We have already formed a committee entrusted with the task of submitting a detailed study of the implementation of tobacco taxes and its consequences. The xommittee has been given 45 days to come up with their proposals, which will be discussed among the Economical and Financial Committee members. Though it has been finally approved, we prefer to study the pros and cons of the step, ” the source added.
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