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Empty UAE Consumer Pockets After VAT

DUBAI – 29 January 2018

During the beginning of 2018, The United Arab Emirates implements a value-added tax of 5%, to increase government revenue sources.

 

Value added tax application has caused a great impact as expected on those who reside in the United Arab Emirates. Although a few items are excluded from taxation, yet many categories such as Automobiles, Electronics, all forms of entertainment and many more, unfortunately, fall under taxation.

Set of grocery and retail bill total prices before and after calculation of 5% VAT.

Value added tax refers to tax applied on goods and services purchased by a consumer, this form of tax increases as the price of product or services does as well.

Since the implementation of the VAT, UAE residents have been reacting negatively, this is mainly because not only do they have to pay the 5% of their total bill, however, some business have increased their prices in order to compensate for the value-added tax paid by the business as well.

High value-added tax on a 3000 Dirhams bill at a well-known retail store in Dubai.

Several rumors have been circulating that with such negative feedback resulting from UAE residents and locals; VAT is expected to be eventually lifted after a certain period of time. However, it is unlikely to occur and is expected to even increase over time.

 

 

Fatima Ahmed,  a retail employee in Dubai,  stated that the value added tax will surely impact the United Arab Emirates and its government positively as it creates more sources of revenue to be used in developing the country’s infrastructure and its present and future businesses but when it comes to her and people who live in the UAE whether they are residents or locals then VAT is more likely to affect them negatively on the long term especially that she believes that VAT is more likely to be increasing in the upcoming years, she also believes it’s unlikely that the value added tax would be lifted whether at the moment or anytime in the future.

Fatima Ahmed, the retail employee at a well-known clothing store in Dubai, daily calculating tax on customer transaction bills.

 

 

Not only employees who earn wages have felt affected due to the application of value-added tax, but VAT has also caused a great burden to students especially college students who have been already suffering the burden of high college expenses.

Farah Ali, a media student at a well-known university in Dubai, stated that before the implementation of value added tax, she was already falling under the great pressure of paying her college expenses which were already considered difficult to pay for, now that value-added tax is in introduced, her university has set a new price list inclusive of the value-added tax which in total calculates a large increase in price than what she was obligated to pay in the past before VAT.

Many residents still continue to see the dark side of the new implementation of the value-added tax on goods and services but it still remains important for others to understand that such taxes paid by them will eventually be returned in form of better public goods and services like public hospitals, schools, and parks.

It is highly unlikely that VAT would be lifted after a short period of time however it is most likely to increase, yet not rapidly and may even be implemented effectively by other countries in the future.

Toka Abdalla – SNW NEWS

 

 

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