GCC states customs union to unlock e-commerce potential

It is necessary to resolve the vexing issue of “double” customs duties when goods ordered from an e-commerce portal based in one Gulf country is shipped to another. What this means is that 5% duty is charged by one Gulf state and then again in the second Gulf market where the package has to be delivered to the customer, according to a recent source.

The double duty imposition does not happen on all transactions, but there have been such instances. It means that the second customs duty expenses have to be borne by the portal as it cannot be passed on to the shopper.
This is quite the dilemma for online vendors. Not all of them have built up the scale to maintain warehousing and logistics operations in all the key markets. The uncertainty on customs duties is also the reason why some portals are sticking to one or two key markets rather than seek wider delivery coverage.

As of now, e-commerce portals in the Gulf have the UAE as their headquarters. This has obviously to do with the advanced logistics and support infrastructure in place, as well as the fact that UAE’s consumers have been among the fastest adopters of online shopping. But their counterparts in Saudi Arabia are also heavy hitters in the click-and-buy space and the sizeable proportion of the young makes it a compelling marketplace for virtual vendors.

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