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From January, 1st, any expat in the UAE will have to pay the VAT – are you ready for it?

 

In less than one month, the UAE will introduce the VAT to all its residents -both locals and expatriates. Do you want to know if you are ready for it? Then, check if you know the answer to the following questions!

1. What is exactly VAT?

As UAE’s Ministry of Finance states the Value Added Tax (or VAT) is an indirect tax (also called “a general consumption tax”). It is applied to most supplies of goods and services that are bought and sold.

2. Which VAT rate will be imposed?

The standard VAT rate will be 5%.

3. Which products and services will be exactly affected by VAT?

Most products will be taxed. The exceptions are essential commodities (such as basic food or essential medical care). Electronics, furniture, clothes, electricity, gas…. All these will be subject to VAT.   

4. Why is the UAE implementing VAT? 

Hospital, roads, public schools, parks… all these public services are paid from the government budget. As the Ministry of Finance explains “the VAT will provide the country with a new source of income which will contribute to the continued provision of high-quality public services into the future. It will also help government move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.” 

5. Will there be changes in the cost of living? 

According to information from UAE’s government, the cost of living might slightly rise, but this will vary depending on the individual’s lifestyle and spending behavior. As there are several products and services relieved from the VAT, if your spending is mainly on those things, you are unlikely to see any significant increase. 

 

There are frequent updates by the Ministry of Finance so we highly recommend catching up with the latest news. You can find the Ministry’s website here.  

 
Getting ready for VAT

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