VAT Increases Car Maintenance Costs in the UAE |

VAT Increases Car Maintenance Costs in the UAE

In a new development, VAT has been implemented on car maintenance services that will increase financial worries of motorists.

Posted on

17 January 2018

Last updated on 30 January 2018
VAT Increase Car Maintenance Costs

Value Added Tax (VAT) has been implemented in the UAE from January 1, 2018, and with only a few exceptions, 5% VAT is now applicable on the purchase of all new items. The automotive industry and transport sector have also been affected by VAT implementation as an increase in the prices of new cars, insurance premium rates and fuel prices has been observed after the implementation of VAT. Adding to the financial worries of motorists on a tight budget, 5% VAT has also been implemented on all minor and major car maintenance services according to a new announcement by authorities.

Details of the VAT Implementation on Car Maintenance Services

VAT implementation will affect all the minor and major car maintenance services including mechanical checkup of a vehicle, car repairs, car wash and other related services. According to authorities, car maintenance services are considered a business activity and as VAT has been implemented on all commercial and private business activities, it will also be applicable on car maintenance services.

Who Needs to Be Worried?

The implementation of 5% VAT on car maintenance services will affect those motorists the most who have an old or damaged used vehicle that needs frequent repairs and its regular maintenance cannot be ignored. New cars, particularly in their first two to three years, don’t demand frequent maintenance or checkups and only require regular scheduled maintenance as per the instructions mentioned in the car owner’s manual. However, as a car gets on in years, the need for maintenance of the mechanical parts increases significantly. On the other hand, damaged vehicles that have experienced a minor or major accident require regular as well as frequent maintenance, which will now be costlier than ever before in the UAE.

SEE ALSO: How 5% VAT Implementation Will Affect the Car Market in the UAE

Parking Fee Exempted from VAT

Bringing some relief to the motorists who are under severe pressure to manage their car fuel and maintenance expenses, authorities have planned not to implement VAT on public parking fares. Fares in public parking facilities will not change, however, VAT will be implemented on parking fees in commercial facilities.

Details of the VAT Implementation on Car Maintenance Services

Three Ways to Limit Your Car Maintenance Expense

VAT implementation on car maintenance services has certainly added financial pressure on motorists, particularly after a massive increase in the fuel prices for the first month of 2018. Fuel prices jumped to a new two-year high, which has clearly increased the worries of motorists on a tight budget. However, there are practices that can be followed to better manage both fuel and car maintenance expenses in the UAE.

Let’s explore what motorists can do to manage their fuel and car maintenance expenses smartly in the UAE:

Start Using Public Transport More Frequently

It will reduce your fuel and car maintenance expenses significantly if you can limit the use of your private vehicle and start using public transport more frequently. With limited use, maintenance needs of your vehicle will decrease automatically and it will also help you to manage your fuel expense more effectively. One easy way to start using public transport is to look at your weekly commuting needs and then identify trips that you can take using public transport.

Upgrade Your Old or Damaged Used Car

As discussed earlier, an old and damaged used car is actually a white elephant for you as it will continue to add to your car maintenance expense. You need to know the right time to sell your used car and once the car maintenance costs start exceeding the actual resale price of the vehicle, it is a clear sign that you need to upgrade your vehicle. Upgrading to a new or slightly used vehicle will help you manage your car maintenance expense more easily.

SEE ALSO: Your Complete Guide to Buying a Family Car in the UAE

Upgrade to an Electric Vehicle (EV)

Have you ever considered upgrading to an electric vehicle that can actually reduce your car maintenance and fuel expenses to a bare minimum? If you haven’t, then you clearly need to know about some amazing advantages of buying and owning an EV in the UAE.

Here is a list of some notable incentives and advantages of buying and owning an electric vehicle in the UAE:

  1. Electric vehicles don’t host a combustion engine, which is a reason why they don’t require any complex mechanical car maintenance service that the conventional cars with a combustion engine need.
  2. EVs, as their name suggests, use an electric source to generate power, hence they absolutely don’t need traditional fuel like petrol or diesel. It means car owners will not only get the much-needed relief from increased car maintenance costs by upgrading to any EV, but their fuel expense will be reduced to a bare minimum too.
  3. Electric vehicles ensure zero emissions and the owners of EVs in the UAE are offered incentives by the UAE government for contributing towards reducing the carbon foot print of the country. The UAE government aims at improving the air quality in years to come and urging motorists to shift from conventional vehicles to electric vehicles is amongst the notable future agendas of the government.

For details of the benefits that electric car buyers and owners can avail in the UAE like green car loan, green car insurance, green car registration and many others, click here.

Three Ways to Limit Your Car Maintenance Expense

How can help? is the largest car buying company in the UAE that can help you sell your used car in just 30 minutes, regardless of its condition, age, make or model. also buys accident-damaged, totaled and even non-running cars and offers car sellers an opportunity to sell their damaged vehicles at a fair price. If the maintenance cost of your used car is taking a toll on your monthly budget and you want to sell it quickly to upgrade to an EV or any other vehicle, promises guaranteed purchase of your used car in just 30 minutes. The entire post-sale paperwork is handled by the’s team and payments are made through electronic bank transfer, which makes the entire process quick, effective, safe, transparent and 100% hassle-free.

SEE ALSO: VAT in the UAE: Why Car Sellers Must Be Aware of Fraudsters?

If you are concerned about the increased maintenance costs of your used car after VAT implementation on car maintenance services and are looking to replace your car with a new or slightly used car, then don’t forget that with us, you can sell any used car in just 30 minutes while all the post-sale paperwork is handled by’s team.
Sponsored by is the Middle East's first car buying service, which offers FREE and instant online car valuation, FREE car inspection, a GUARANTEE to purchase ANY car within 30 minutes, pay you immediately and take care of all the paperwork.