The days of Value-Added Tax are upon us as we wait and see how things unfold on January 1. But here’s a bit of good news regarding VAT: All public transport, including Dubai Metro, taxis and buses in UAE, will be exempt from the new tax. That means passengers will not have to worry about price hikes on their daily commute.
VAT in UAE begins January 1, 2018
VAT will be introduced across the UAE on January 1 at a standard rate of 5% by the Federal Tax Authority. We know that VAT will affect things like water and electricity consumption, clothes, electronics and food.
Drivers can expect a 5% increase the next time they fill up their tank at the petrol station. In October, the UAE also introduced an excise tax on energy drinks, tobacco and sugary drinks.
Why is VAT being introduced?
According to the Ministry of Finance: “The UAE Federal and Emirate governments provide citizens and residents with many different public services – including hospitals, roads, public schools, parks, waste control, and police services.
These services are paid for from the government budgets. VAT will provide our 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.”