As United Arab Emirates (UAE) and Saudi Arabia are going to implement value added tax (VAT) from January 1, 2018, Indian expatriates living here are planning to shell out more money so that they can communicate with their families back home.
In both the Gulf nations, the monthly mobile bill is one of the important expenses while living abroad.
VAT will be applicable on utility bills, including telephone, internet and digital commercial activity. The proposed 5 per cent tax in Gulf is much lower compared with other parts of the world, including India. VAT on utility bills will be in line with the prevailing international norms, based on international practice, customers can brace 5 per cent VAT to be added their bills, according to sources.
In both these Gulf countries, telecom services such as mobile, fixed line, data services and also payable digital services such as downloads fall under the tax ambit and shall be subject to VAT at standard rate.
After introducing VAT, effective airtime which is also known as talk-time or mobile credit for prepaid customer is likely to reduce, for instance airtime on a SR100 prepaid voucher will marginally dip to SR95 after deduction of SR5 as VAT.
For postpaid users, it is likely to be added in the bill but it is not yet clear whether it will be charged upon the overall bill including subscription amount or only on the call cost.
However, there is some relief for consumers. Roaming charges within GCC have been exempted from VAT which will make communication easier for people who frequent the region, sources said.
Telecom companies, unlike other business organizations, have not yet announced how to apply VAT to prices.
VAT is coming at a time when tariffs for data usage have been increasing and lucrative economy options for data bundles are shrinking with reductions in package duration and bandwidth data validity.