Despite expecting VAT to be a challenge in the UAE, residents are largely optimistic for the year to come, according to New YouGov Omnibus research.
The results found that 50 per cent of residents have positive sentiment towards the UAE for 2018, while 34 per cent are neutral and 15 per cent are negative. This positive attitude is prevalent despite the fact that 62 per cent of residents feel the introduction of VAT will be a challenge for the country.
The results suggest this perception, in part, is born out of the levels of increased expenditure expected, with 44 per cent of residents claiming their spending will increase significantly as a result of the tax, and the same proportion (44 per cent) feel it will reduce their disposable income.
To that end, the majority of residents (46 per cent) believe people will expect a relative pay rise to compensate for their increase in expenditure as a result of VAT.
Generally, over half of residents expect to spend more money in 2018, with most claiming they’ll need to find the most extra cash for utility bills and their daily commute/fuel (both 49 per cent) and groceries (48 per cent).
Whilst they are more certain of the impact of VAT on their personal expenditure, residents are less sure about the impact of the tax on financial dealings among companies. When asked if they think the new law will regularise bank lending to SMEs, the largest majority, (55 per cent) neither agree or disagree with the statement, whilst 28 per cent agree it will and 17 per cent disagree.
Slightly more believe the law will bring transparency to company accounts and financial dealings (39 per cent), however, most are still unsure (42 per cent), whilst 19 per cent disagree with the statement.
When asked about the impact of VAT on visitors to the country, 35 per cent of residents say it will discourage tourists, yet the largest proportion are unsure (37 per cent) and 28 per cent say it will not. However, a little more believe it is more likely to discourage expats (42 per cent), while 38 per cent do not know and 21 per cent say it will not.
Interestingly, when it comes to handling VAT in everyday life, 45 per cent of residents believe the need for low denomination change will complicate simple cash transactions for consumers.
The tax has also got residents thinking about what else is next. Over half (54 per cent) said the introduction of the new law has made them question whether income tax will be enforced in the UAE in the future.