UAE, Saudi Arabia mobile phone shipments hit by vat

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The introduction of value-added tax (VAT) and poor job security have taken a toll on first quarter mobile phone shipments into the UAE and Saudi Arabia.

According to the latest numbers from research firm International Data Corporation (IDC), total mobile phone shipments into the UAE declined by 14.7 per cent quarter-on-quarter, and 5.4 per cent in Saudi Arabia quarter-on-quarter, while smartphone shipments into the UAE were down 4.6 per cent.

Nabila PopalNabila Popal, a senior research manager at IDC, said the UAE market was experiencing a significant shift in consumer spending as evidenced by the first-ever cancellation of the spring edition of Gitex Shopper.

She added that the true impact of this shift could be seen in the independent retail stores of Deira, the traditional trading and commerce centre of Dubai, where shops that were previously impossible to lease are now sitting 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 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,” said Kafil Merchant, a research analyst at IDC.

“A significant portion of the local population is expected to leave the country due to the introduction of this levy, with the exodus expected to run into the millions. The full impact remains to be felt, however, as many expatriates are waiting for the school year to end before leaving,” he said.

The report states that Nokia continues to dominate the vendor landscape for feature phones, garnering 87 per cent share of the overall GCC market in first quarter.