What is it?
Excise duty is on ‘harmful items’ including tobacco and fizzy drinks. It will be applied at a rate of 100 percent on tobacco and energy drinks, and 50 percent on fizzy drinks.
Why is it being introduced?
The GCC is developing taxes to compensate for falling oil revenues. Excise duty is also intended to discourage consumption of products that harm health and the environment.
Who does it affect?
The goods and services of an estimated 250 companies will be taxed. They include importers, suppliers and manufacturers. Customers will also be affected by higher prices.
Are there exemptions?
Exempt products are likely to include those that have been stockpiled or are used to produce other goods, and diplomats and consular staff may be exempt. The government has yet to provide full details.
How will it impact the economy?
The introduction of excise tax and VAT are expected to boost inflation by a one-off 1.4 percent. Experts warn it could also lead to some items being withdrawn from the market.
(Source: Arabian Business YouTube channel)