The UAE is implementing VAT on water, electricity and food

The UAE is implementing VAT on water, electricity and food

With the implementation of value added tax on 1 January, water and electricity bills will now be subjected. The 5 per cent VAT will be added to goods and services across the UAE and Saudi Arabia, whilst the rest of the GCC will implement the tax in 2019. The VAT is likely to generate Dhs 12 billion in its first year of us whilst it could generate Dhs 20 billion in its second year - according to the Minister of Economy, Sultan Al Mansouri. 

The executive regulation states that supplies of water and energy in all forms, including electricity and gas - whether it is used for lighting, heating, cooling, air conditioning or any other purposes, will be subject to the tax. The VAT is set to raise the cost of living by about 2.5 per cent. 

Anything that is not included in the exempted or zero rated goods and services, will be subject to the tax. Petrol, diesel, cars, clothes and electronics will also have a 5 per cent tax, even if bought online.  All foods, including rice and bread, will also be taxed at 5 per cent. 

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