Assessing the Potential Impact of Introducing VAT on Price Levels in Qatar

Abstract

Potential introduction of VAT in Qatar may have a significant pass-through effect on inflation rates. Nevertheless, using the Harmonized Index of Consumer Prices at constant tax rates (HICP-CT), in this article the authors find that the pass-through effect on prices is going to be low, at 2.17%, even though the proposed VAT rate is 5%. They conclude that this indicates a low, temporary impact of VAT on the inflation rate, which should not worry households or businesses in Qatar.