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Niche Arabia

Consumer Behaviour After 15% VAT Increase

What does  a 10% increase in sales tax for the Kingdom of Saudi Arabia mean for retailers? 

Will consumers opt to wait to shop abroad or will they absorb the tax? 

With salaries being cut an average of 40% across all industries, and the cost of living increasing with the new tax on amenities, such as electricity, gas, grocery items, and even education; where does the average Saudi consumer fall now in terms of their shopping behavior?

According to a recent study done by IPSOS on the Primary Consumer Sentiment in Saudi Arabia, 51% of the world’s economy is from Saudi Arabia, which closely competes with China’s numbers. 

Due to the combination of the increase tax and economical crisis brought on due to Covid-19 Statista.com created a study that carefully calculated and predicted the e-commerce consumption rate in Saudi Arabia amongst various categories:

Based on the results above, people will continue to indulge in luxurious items like clothes (fashion) even after the 15% VAT increase. 

Question: Will you be buying more or less in 2020? 

References:

https://www.arabnews.com/node/1697956

https://www.ipsos.com/en-sa/saudi-arabias-primary-consumer-sentiment-index-june-2020

By Elaf Trabulsi

Engineer & freelance writer

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