Bahrain Duty Free (BDF) has increased arrivals duty free tobacco prices at Bahrain International Airport, effective mid December 2019.

The increase includes all types of tobacco and follows a regulatory decision by the Ministry of Industry Commerce and Tourism. Prices of tobacco products in departures are unaffected.

This latest development is in keeping with similar decisions in other Gulf Cooperation Council countries following the decision to implement excise duty on arrivals duty free tobacco products.

As reported, the President of the UAE issued Federal Decree-Law No. 7 in August 2017 that placed a tax on select goods (tobacco products, energy drinks and soft drinks) consumed inside the country, including all the country’s free zones and ports.

Crucially however, duty free tobacco sales made on departure were exempt from the ruling. The excise tax came into force on 1 October 2017.

VALUE INDICATOR

Speaking to TRBusiness back in 2017 shortly after the excise tax was introduced, Colm McLoughlin, Executive Vice Chairman and CEO, Dubai Duty Free said: “We think that the introduction of excise duty is good for Dubai and good for the UAE. We’re looking at it [the excise tax] very positively from the view of Dubai Duty Free, because it will indicate what good value we are offering, and the revenue is needed by the government.”

Assessing the impact of the excise duty on tobacco products in BDF’s arrivals store, Domnick O’Reilly, Head of Operations, Bahrain Duty Free told TRBusiness: “As you know within the GCC region there is a move to standardise laws in order to ensure operators in all countries are competing on a level playing field where possible. We fully support any initiative that seeks to ensure the GCC continues to develop as a single market.”

He added: “Since the excise duty was rolled out, tobacco sales in our arrivals store have witnessed a small decline compared to 2018 levels. We have, however, noted an increase in tobacco sales in our departures store that is almost the same as the arrivals drop.”

Ensuring customers are fully aware of the continued substantial savings on tobacco products compared to the local market is key to minimising the impact of the excise duty. O’Reilly explained: “Our arrivals team is working extremely hard to ensure our customers are aware of this saving. This is showing in the performance level of the category.”

The first quarter of 2020 will be eventful for BDF, with the opening of the new $1.1bn terminal at Bahrain International Airport expected to take place. As reported, the retailer will operate an inaugural 5,000sq m of retail space in the terminal, more than twice the amount it is currently operating. The core category duty free and speciality retail contract awarded to Bahrain Duty Free Company by Bahrain Airport Company in 2018 was finalised at the end of last year. The agreement covers the new facility, which will feature raise capacity to 14 million passengers per year and feature 104 check-in counters, 36 passport control booths and 24 security screening points.