So the VAT has already entered the boundaries of the UAE and everyone has been posting “VAT a new year 2018” all across the nation – but do we know why, what will it be applicable to and how we can still save?
Well, living up costs are slowly rising up and people still seem to be confused on how to go about with it.
The introduction of VAT in the GCC has been driven by the World Bank and this initiative is to move GCC states economies away from their reliance on the oil and gas industries. The introduction of VAT aims at securing more state income and neutralizing the current crash in the oil price.
Not many know this, but all the GCC states have signed this Unified Agreement on VAT, introducing itself at the rate of five percent in 2018. This agreement also gives each state the option to exempt certain industries and products from the application of VAT.
HOW IT WORKS
VAT is a mere consumer-based tax applied to the supply of both goods and services and is designed to be paid by the consumers. The main principle of “The more you spend, the more VAT you will pay” is realistic.
As mentioned above, many industries have been exempted from VAT including healthcare, education, residential real estate, certain financial services, public transportation and international travel like air tickets.
DID YOU KNOW: The advertised price of any goods or services will be deemed to be VAT inclusive. The seller will not be allowed to add VAT in addition to the advertised price of anything you are buying.
TIPS TO DEAL WITH VAT FOR RESIDENTS
Even though VAT is inevitable, doesn’t mean you cannot minimize its impact.
- Consider buying second-hand goods.
- Buying ingredients and cooking at home takes a bit of effort, but it can help boost your savings.
- Buying local fruits and vegetables instead of imported varieties could help you save some dirhams. Also, don’t forget to compare different products before making purchases.
- Pre-book your online air tickets or try to book during flash sales to save money on your holiday.
- If you don’t own a car, it’s advised to use the public transportation quite often as compared to taxis. If the weather permits, try and walk for short distances.
- Cut down your unnecessary spending, and try to buy only what is required.
- Cut down the use of Air conditioners as they can heavily slash your electricity bills. Use LED power saving bulbs and switch off lights when not in use.