VAT Results in Reduced Mobile Phone Sale in UAE

The recent research data revealed by International Data Corporation (IDC) shows that the total mobile phone sales shipments have decreased in both the UAE and Saudi Arabia following the introduction of the value-added tax (VAT). The research consisted of mobile sale data for the first quarter.

According to the numbers released by the research company, the sales of mobile phones during the first quarter of 2018 decreased by 14.7 per cent in the UAE and 5.4 per cent in the KSA as compared to the same period last year. The shipment of smartphones into the UAE also dropped by 4.6 during the period.

Nabila PopalAccording to an IDC research manager, Nabila Popal, the market of the UAE has been experiencing a constant shift in the way how and where consumers choose to spend their money, ever since the launch of the VAT. As a result of this shift, even the popular trading and commerce hubs like Deira in Dubai are seeing a degrade in the demand while many shops sit vacant.

“Organised mall-based retail chains that focus exclusively on consumer electronics are also struggling. Businesses in Qatar, meanwhile, will continue to suffer from the prevailing political challenges and import embargoes that have already impacted the country’s mobile phone market,” she added.

The overall shipment of mobile phones into the GCC region dropped by 9.9 per cent as compared to the last quarter. In total, 5.9 million mobile phones were shipped into the region in the first quarter of 2018. On the other hand, the shipment of smartphones into Saudi Arabia dropped by 7.5 per cent against the last quarter. UAE VAT Rates is different in this mobile and technology sector. The VAT of all mobile sales are reduced and the graph of sells are reduced.

The research also included data for other GCC regions, which have not yet introduced VAT. Whereas Kuwait recorded a 3.9 per cent quarter-to-quarter drop in smartphone shipments, Bahrain and Oman, against the odds, saw a growth of 3.4% and 6% respectively during the quarter.

Kafil MerchantAn IDC research analyst, Kafil Merchant, reportedly said, “The size of the overall market in Saudi Arabia is expected to decline over the coming years as a direct result of the new expat dependent tax.”

The situation is so severe that many expats in the UAE are reportedly planning to leave the country after the current school year ends. The number may easily go into the millions.

The report released by the IDC reveals that Nokia continues to stay the top seller of feature phones, with an overall 87 per cent market share, in the GCC in this quarter. Samsung, on the other hand, is leading the smartphone market of the GCC with a total 35 per cent shipments sharing while Apple remains second with 24 per cent market share.

The research firm also reports that the overall shipment of mobile phones may continue to decline for some more time as consumers start adjusting with the after- impacts of the VAT.

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