Water, Electricity Bills, And All Food Items To Be Affected By VAT

As the days draw closer that UAE residents will start paying tax more information is being made available and they aren’t too excited. The Federal Tax Authority (FTA) said at a presentation in Dubai on Wednesday, November 8th that everything that isn’t listed in the executive regulation as exempt or zero rated is subject to 5% VAT.

This unfortunately means that water and electricity bills will be subject to 5% VAT as of January 2018. Other items that will also be affected by VAT includes petrol, diesel, cars, clothes and electronics, online retailers and even “social influencers.”

SEE ALSO: 6 Ways VAT Will Likely Affect The Retail Sector in Dubai

Another shocker that came to light is that all food will be subject to VAT. We previously expected some basic food items to be exempt from VAT according to statements from officials. Staple food like bread and rice was especially thought to be exempt but it recently came to light that all food items will be affected by VAT.

The authorities are very optimistic and excited about the implementation of VAT as it is expected to generate Dh12 billion for the country in its first year. Residents on the other hand are, however, dreading it.

According to forecasts, the cost of living is expected to increase with 2.5% after the implementation of VAT.

The UAE has already implemented excise tax on energy drinks, tobacco and sugary drinks as of the beginning of October. This is referred to as sin tax as these products are bad for people’s health.

Tourists visiting Dubai will at least be able to claim VAT back on purchases made during their holidays and items such as education, healthcare, residential property and local transport will be either exempt or zero rated.