VAT, a hard blow to Gulf migrants

NIZAMABAD: Migrants to Saudi Arabia and the United Arab Emirates (UAE) are getting adversely affected by the recent introduction of Value Added Tax (VAT) in those countries. This is the first time the two major Gulf countries introduced VAT, a 5 per cent tax on goods and services brought into effect on January 1.

Lakhs of Indian workers, especially from Telangana, currently work in the Gulf. Numerous unemployed youths, illiterates and semi-skilled workers went to the Gulf countries in search of a livelihood. This number gradually increased over the last four decades as more and more young people from composite Nizamabad, Adilabad, Karimnagar, Warangal, Medak and other districts in TS and parts of AP flocked to Gulf countries for employment. 

For long, Gulf countries practised a tax-free policy which allowed Indian workers to earn huge money. But the introduction of VAT makes living there expensive and depletes the saving they make to remit money back home. The expat community is extremely worried who had already incurred heavy debts to make it to the Gulf countries.

Typically, a youth borrows a tola of gold from a relative to meet initial expenses abroad with a promise to pay back two tola on return.

Speaking to Deccan Chronicle, Mr Anand of Kamareddy, who owns a hair cutting saloon in Saudi Arabia, said that VAT in the Gulf countries will affect all Indian traders and workers in the Gulf. “Many Indian workers could not come to the Gulf because of financial difficulties, so we had to engage workers from Bangladesh, Pakistan and other countries at our saloon. The Indian government must talk to its counterparts in the Gulf for an exemption for migrant workers,” Mr Anand said.

Usually, Gulf migrants bring gold, cosmetics, electronic goods on their way back home. 

Now, they are forced to pay VAT on these items which make them unaffordable for many.