People of DIAC

VAT Impacting Student’s Pocket

3A student at American university in the Emirates "VAT left a radical impact on our daily spending and income".

Dubai – 28/01/2018

With the beginning of 2018, UAE witnessed an increase over majority of it services and products due to the   % VAT that is being implied that left out moderate impacts.

VAT ; Value Added Tax is known to be an indirect way of taxation. It is a kind of general consumption of tax that many countries had been practicing. Countries that  practice value added tax apply it mostly on goods and services that are purchased and being sold. It is based upon citizens expenditure as opposed to his/her wage.

VAT history is moderately a new type of tax. Its history refers back to 1954 in France where Lord Barber started it. Governments thought of VAT as a plan to improve tax sales and improve the economic growth of the country in order to be able to use those money that is being collected in other countries sectors. Moreover it was a way that has resolute the problem that many countries had been facing which is sales tax.VAT swept our world. More than 160 countries implied vat in their systems of taxation. In its beginning, US did not accept to imply VAT to the whole country but state of Michigan accepted and implied VAT.Nowdays all European Unions implement Vat.VAT ranges differently and Hungary is known to have the highest VAT rate which is 27 %.

The use of tax currently decrease consumers demand and increases our cost of living.


VAT in GCC and UAE was an ambitious plan by World bank which was in favor of pushing GCC country’s economy from their dependence on gas and oil. Since Jan 1 2018 , United Arab Emirates implemented a 5% VAT to its major products and services .Many of us as residence would ask why is UAE Implementing Vat and here is the main reason.UAE government is known to offer its residents public services like parks, schools, hospitals, defense and much more. Budgeting these services is done from the government , so with vat the country will be able to have extra income for the budgeting. This action will put in a great influence on the quality of the survives that is being given now and in the future. They are thinking of new ways upon how to raise the economy and industry of UAE by this VAT . Local transportation, residential properties and some financial services are exempted from VAT .UAE  will need to coordinate vat with GCC countries as its connected by the economic agreement with GCC countries .



5 % increase over certain products in UAE’s market after the usage of new system VAT.

VAT in UAE will be added in this way. The business collects the tax from us as consumers and then pay it to the government. It will be the business responsibility to note done their costs and charges of VAT. In case of paining vat to suppliers, the government may offer a refund on tax.VAT will be shown upon in the supply chain.



VAT will target everyone that is living in UAE, since its applied on daily uses. Our cost of living is expected to increase. Some may see is enormous and some may consider is slightly referring to the lifestyle and spending one behaves upon.


A.I student at American university in the Emirates “VAT left a radical impact on our daily spending and income”.


In my interviews I focused upon how university student and segments get affected by VAT. Student at the American university in the Emirates A.I mentioned that ” radical  impact had affected us students by the implant of vat, such as increasing our daily profit and spending , and leaving our families in fear of future with paying our fees expanses.

The owner of Dar al Hayat bookshop A.A answered upon how vat affected their business. It was majorly a negative impact as their customers started seeing everything as more expensive. It is a positive route for the government itself but for our business, it won’t benefit  us. One of the main ideas that A.A thought of in order to enhance vat implication in a better way and keep their customers, is by making occasional discounts or keeping the prices just as it is and us paying the vat price to the government. He also mentioned that they got a well practiced team in the financial sector who are controlling this change and enhancing it.

Dar al Hayat bookshop declared a negative impact on their sales since the placement of VAT and financial drop.



Mini market at universities witnessed a huge left back in their stocks and are thinking of new ways to grab students within the implement of VAT to their prices.


Moreover, the manager of the mini market at the American University in the Emirates mentioned that vat was a negative plan for them. It left out many stocks back and the demand of students on buying from them is decreasing. One of their plans is to provide combo’s and student discounts on their food and products, but majorly their business got affected in a crushing way.

In the coming future, the GCC countries and still making studies upon when will the implement VAT like UAE.In UAE , I see that the country’s economy and industrial development will flourish and they will use this tax in many developed forms. UAE is still working on different tax plans but they are not being agreed upon yet. If the consumers spending was slightly affected, further thoughts of increasing the 5 % would be thought of. Lastly, VAT will open widely many future jobs in terms of financing, It and much more .

         Juel Marticho- SNW News

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