The UAE will introduce Value Added Tax (VAT), a broad-based indirect tax levied on the consumption of goods from January 1, 2018 at a standard rate of 5 per cent.
About VAT in the UAE
VAT is not collected by the government, rather it is collected by businesses at every stage of the supply chain on behalf of the government. Meanwhile, businesses can reclaim refunds from the government for VAT paid to suppliers. Thus, VAT will ultimately be borne by the final consumers rather than being a tax on business activity.
VAT is one of the most common types of consumption tax around the world. More than 150 countries have implemented VAT or its equivalent, Goods and Services Tax (GST), including all 29 European Union (EU) members, Canada, New Zealand, Australia, Singapore and Malaysia.
With the implementation of VAT just a few days away, if you have questions feel free to ask me, the resident Banking Editor at Gulf News. I will publish most popular reader questions and his answers daily
VAT’s up Babu?
1. Will my children’s school tuition fees be affected by VAT?
2. Will VAT impact school expenses like bus fare, uniforms and text books?
Yes, VAT is applicable on these
3. Would all shopping of clothes, bags, shoes and other outfit essentials be subject to VAT?
4. Will my morning coffee cost 5 per cent higher with VAT?
5. Will my gold purchases be affected by VAT?
On gold jewellery and coin purchase you pay VAT, but not on gold bullion (for investments)
6. Will my residential rent be higher with VAT?
7. For expats, will sending money home cost more with VAT?
8. Will my flight tickets be more expensive with VAT?
9. Would I be charged VAT for online shopping on sites such as Souq, ebay or Namshi?
10. Will my optics expenses comes under the purview of VAT?
11. Will my petrol be taxed?