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Abstract …………………………………………………………………….. 3
Introduction ………………………………………………………………... 4
Research Method……..……………………………………………………. 6
Conclusion ………………………………………………………………….. 10
References ………………………………………………………………….. 12
Abstract
This study aims to analyze the introduction of value added tax from the perspective of small and
medium enterprises in Qatar. The awareness among SME’s in Qatar regarding the introduction of
VAT is assessed in this paper. In addition the paper also examines the area of concerns of SMEs in
Qatar regarding implementation of VAT in their organization. The result of the study indicate that
the level of awareness is low among SME’s in Qatar. Moreover majority of the business agreed
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1. Introduction
One the onset of the recent falling oil prices the Gulf Corporation Council countries decided to
introduce value added tax in the region. On 2015 the finance ministers of GCC countries agreed
on major issues related to implementation of Value Added Tax in the GCC region. The
implementation of a VAT regime is part of an overall initiative to help the GCC states diversify
their revenue sources. The implementation period for VAT in the GCC is expected to begin on
January 2018. As a part of this GCC wide agreement Qatar announced its plan to introduce VAT
in the country. On June 18 2016 Ministry of Development and Planning and Statistics announced
Due to the fact that GCC is a region where there is comparatively minimal usage of tax and tax
regulation it would be very challenging for the government to implement VAT (Reiche, 2010).
The implementation will have a major impact how business operate as the system affects all
aspects of value chain process in an organization (Tait, A. A. 1988). Systems such as IT and
billing and accounting will need to be updated according to the new requirements. Business
entities in the region will have to prepare for the reform process and ensure that it complies with
This study is conducted on small and medium enterprises in Qatar. SMEs are considered as the
backbone to any economy in the world. Around 95% of the business organizations globally fall
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under this category. In Qatar Small and Medium Enterprises (SMEs) represent majority of the
1. To assess the level of awareness among SME’s in Qatar on the VAT implantation and identify
2. Literature Review
2.1 VAT
Value added tax is a form of indirect tax which was first introduced by France in 1954 (James
& Nobes, 1996). An indirect tax is levied upon the goods and services at each step of the
supply chain (McLure & Bloomfield, 1987). One of the most distinct feature about VAT is
that the ultimate payer of VAT are the end consumers rather than business. Business act as a mere
collector of the taxes by adding tax to the price of their product (Sahoo, A., 2015). The GCC
VAT system will be based on a multifunctional single market system. A common initial standard
VAT rate of 5% has been agreed across GCC. Certain industries such as social services healthcare
and education will be exempt from VAT. Basic food stuffs will be subject to VAT at a null percent
rate.
2.2 Awareness
Awareness is the state or ability to perceive to feel or to be conscious events, objects or sensory
patterns (Thorne, B. M., & Henley, T. B. 1997).In other words awareness can be defined as a
the reform process (Csontos, Kornai, & Tóth, 1998). He argued that the when reforming
welfare system it is of utmost importance to educate the stakeholders regarding tax policies in
In Malaysia for the Goods and Services tax to have a successful transition the government must
ensure that the taxpayers are fully aware of the system (Marimuthu, M., & Bidin Z,2016). In
this paper the author concludes that the effective implementation of GST in Malaysia will depend
on the measures that the government takes to educate its citizens regarding the new welfare
reform process
This research primarily focuses on the level of awareness and preparedness for VAT
implementation among SMEs Therefore it is of utmost importance to define the term Small and
Medium Enterprises National (SMEs).According to the National Detention of SMEs Small and
Medium Enterprises shall mean: “the companies registered in accordance with the laws of the
State of Qatar, which number of employees does not exceed two hundred and fifty (250)
employees (with exception of companies operating in the creative industries sector and which
number of labor force shall not exceed one hundred (100) employees), and which annual turnover
3. Research Method
The population chosen for the study was small and medium enterprises in Qatar. The primary data
source for this research was the data collected through interviews of fifteen small and medium
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enterprises in Qatar. All business had number of employees less than 250 and had an annual
turnover of less than 100 million Qatari Riyal. The interview conducted was semi structured in
nature with both open ended and close ended questions. The interview was divided into four
sections. The first section of the interview included questions relating to the general information
of the company. The questions included industry of the company, age of the company, annual
turnover. In the second section the questions were designed to assess the level of awareness
among companies regarding VAT implementation. The third section consisted of questions
pertaining to the business concerns company have on VAT implementation in Qatar. The fourth
section of the interview included question to examine the mode of communication between
The interviews were asked if they were aware of the introduction of VAT in Qatar. Over 70% of
the companies said that they were aware of the VAT introduction in Qatar.
Further questions were asked to assess the level of understanding among SMEs on VAT in Qatar.
40% of the respondents replied that they were aware of the reasons why government introduces
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VAT. Remarkably only 20% of the SMEs interviewed were informed about the VAT rate that will
be implemented in Qatar. However majority of the SMEs were aware of the meaning of VAT.
Around 90% of the respondents replied that they knew the meaning of VAT. When inquired about
the recent announcement from Ministry of Planning and statistics of the government’s plans to
introduce VAT eighty percent of the respondents replied that they were not aware of the
announcement. The awareness of the proposed date for the implementation was also low among
The results shows that although 70% of the respondents were aware of VAT introduction in Qatar,
further assessment on the level of understanding showed that SME’s in Qatar did not have
adequate knowledge on the details of the reform process that will take effect in 2018.
In this section the concerns among SMEs regarding implementation of VAT was examined. The
SMEs were asked on the area of concern they might face during the transition period. Majority of
the respondents raised concern regarding the implementation cost of VAT during the transition
period. 95% of the interviewee agreed about the cost of implementation of VAT. Another major
area of concern for SMEs was the cost incurred in the updating of their current accounting
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system. Eighty four percent of the SMEs interviewed believed that the cost of updating their
accounting system might affect their organization. Eighty two percent of the respondents were
concerned about training and preparing their employees for the using VAT in their organization.
SMEs were also concerned about the maintenance of records in order to comply with the new tax
regulation. Over 68% of the SMEs agreed that the maintenance of records for VAT were costly
and time consuming. Moreover the ongoing operation was considered by 65% of the
The results from this section indicate that majority of the SME’s in Qatar agreed with the areas of
concerns identified in this research. The economic factor had major impact on SME’s as most of
the SME’s pointed out during the interview the implementation cost they might incur to
In this section the interviewees were asked what channel of information they preferred for
information regarding the VAT implementation. Majority of the respondents said that they would
prefer a special government website dedicated for VAT. Additionally they also preferred to get
information from the government through free trainings and seminars by government. Many of
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the interviewees responded that they would seek their own consultant’s advice for information
relating to VAT. Attending private seminars were the least preferred mode of information that
From the analysis of the results in this section it can be concluded that the introduction of a
specialized website from the government can be an effective tool to educate the SME’s about the
implementation of VAT. Free training and seminars can also be effective in increasing awareness
5. Conclusion
The findings from this research indicate that the level of awareness among SMEs regarding VAT
implementation in Qatar is very low. It is evident that the information about the new tax reform in
Qatar was not effectively communicated by the government to the business community. In
addition this research was able to identify some areas of concern that SME’s might face during the
transition period and implementation of VAT in Qatar. Finally, this research has provided some
insights on the best mode of communication methods that can be used in effectively informing the
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In conclusion the introduction of VAT system in Qatar will have a huge impact small and medium
enterprises. Every single process in the value chain of an organization will be affected by this
reform. Thus it is of high priority to raise awareness and communicate with the SMEs in Qatar in
order to prepare them for the reform process. More over the implementation of the system must
be done after careful planning and taking into consideration the opinions and concerns of the
SMEs.
This study has a number of limitations. First, the Value Added Tax system was not implemented at
the time writing this research which restricted the paper to only examine the awareness of VAT in
Qatar. However the compliance of VAT system in Qatar can be examined post the introduction of
VAT in Qatar. Second, this study was conducted on SME’s based in Qatar nevertheless the study
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Works Cited
Thorne, B. M., & Henley, T. B. (1997). Connections in the history and systems of psychology.
Csontos, L., Kornai, J., & Tóth, I. G. (1998). Tax awareness and reform of the
Marimuthu, M., & Bidin, Z. (2016). Awareness, Attitude and Probable Area of
http://www.qdb.qa/excellencelist/attach/SMEs-Definition-Booklet-
English.pdf
GCC ministers of finance meet to approve introduction of GCC VAT. (2014, April
http://taxinsights.ey.com/archive/archive-news/gcc-ministers-of-finance-
meet-to-approve-introduction-of-gcc-vat.aspx
http://www.qatarday.com/news/local/gcc-prepare-for-implementing-
vat/39609
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Uyar, A., & Güngörmüş, A. H. (2013). Perceptions and knowledge of accounting
McLure, C. E., & Bloomfield, M. A. (1987). The value-added tax: Key to deficit
Policy Research.
Sahoo, A. (2015). Goods and service tax (GST): A step towards indirect tax
Retrieved January 01, 2017, from Ministry of Development and Planning and
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