A cut in Saudi Arabia's customs duties from 12 to 5 percent will have a major impact on Dubai's trade with the kingdom, particularly in IT and telecommunications, market sources said on Tuesday.
“In particular, the role of Dubai middlemen selling to Saudi Arabia will be sharply eroded,” the sources told the Gulf News.
These operators have flourished on the large difference between UAE customs duties (four percent) and those of Saudi Arabia, and the practice of under-invoicing of goods destined for the kingdom.
While a date has yet to be set on which the new duties will take effect, the sources said some shipments entering the kingdom last week were charged at 5 percent, said the paper.
"The cuts would have an impact on as much as 30-40 percent of the trade in IT components in Dubai. Saudi Arabia constitutes one of the biggest re-export markets for IT components from here," said Dhruv Srivastava, business unit manager for PC components at Tech Data in ubai.
"We have had middlemen here under-invoicing and shipping consignments into the kingdom. So the duty cuts will squeeze out these operators and prove beneficial for authorized distributors such as us."
With Saudi PC demand estimated at 350,000 a year, demand from Dubai for components has been running high for several years, said the paper, adding that monthly shipments of IT components in and out of Dubai average about 120 million dollars – Albawaba.com
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