A report by the International Data Corporation (IDC), a research firm specialising in the information technology and telecommunication sectors, has predicted a 10.1 percent decline in the volume of smartphone shipments to Saudi Arabia and the UAE in the first half of 2018, compared to the same period last year. (Read the full report here).
“As for the anticipated slump in post-VAT shipments in H1 2018, the additional 5 percent for VAT purposes will obviously have an impact on end user prices, and as margins are already extremely narrow in the mobile phone space there will be little room to maneuver with regards to these increases. However, the effect is likely to vary across different price bands, with target consumers for lower-priced models being much more sensitive to changes in price,” Isaac Ngatia, a senior research analyst at IDC said in a company press statement released on Tuesday.
“The GCC mobile phone market is already going through many significant challenges outside of VAT, due to various ongoing social, political, and economic developments, and VAT will only compound this dire situation,” the press release said, quoting Nabila Popal, a senior research manager at IDC.
The economies of the six GCC countries, which includes Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain and Oman, have been badly affected by the decline of oil prices since 2014. The GCC’s economy was also impacted by the ongoing war led by Saudi Arabia and the UAE in Yemen and the recent political tension between Qatar and several Arab states, including Saudi Arabia, the UAE and Bahrain.
On another VAT-related note, the UAE’s telecom operator du announced on Tuesday the launch of an online process to enable its business customers to claim back from the UAE government any VAT paid on their du bills, according to a du press release.
Officials from IDC and du were not immediately available to comment.
Click here for Zawya’s special coverage on VAT coming to the GCC.
(Writing by Yasmine Saleh, Editing by Shane McGinley)
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