Tax increase on the minds of shoppers
From 7 am, 1 January 2018, the Value Added Tax (VAT) will officially come into effect marking a new age in the UAE economy. The VAT is common in most home countries of expatriates and in the world, but it will take some getting used to here in the UAE. The tax increase is fixed at 5 percent across goods and services, including water and energy which is a considered supplied goods. But the VAT will exclude some segments of healthcare, education, some government services, aviation and salaries. For example, your child’s tuition prices will stay the same, but costs of bus fare, uniform, books etc. will be subject to VAT.
Residents have been aware of the VAT increase for some time now, but as it officially has taken effect many are becoming more conscious of their purchases in line with the costs after taxes. Now, hitting the supermarket will take a bit of thought before choosing what you put in the cart. Ice cream cones that used to be Dhs 10 are at Dhs 10.50, a purchase of Dhs 92.86 will result in Dhs 97.50, and overall purchases that though may seem small, can accumulate to high expenses at the end of the month. Residents are concerned at the forecast of a potential 2.5% rise in cost of living.
Implementing, monitoring, and auditing the new VAT may take on a toilsome course for the UAE with plenty of configuring, but take note that stores that do not have an annual revenue of Dhs 375,000 are not required to implement tax. So, visiting the small shops and saving costs for your snacks and such might be ideal.