GCC states have come to an agreement that the rent, health care sectors, education sectors, and around 94 food products will be exempted from VAT. That means your house rent, grocery, hospital or school bills will not be affected by VAT. Tax will not be charged on nursery school, pre-school, elementary school, and government funded university fees. But it is applicable for certain school accessories such as pencils, textbooks, school uniforms, and bus fares.
Will VAT affect Prices or Margin?
The new tax policy Value Added Tax has been comparatively doing well in branching out government revenues without producing too much inflation. There will be no changes in rent due to tax as it is exempted from VAT but consumers should pay more for utilities like water and electricity as they attract a 5% tax which may affect their monthly budgets.
Purchasing a car will be costlier in the UAE due to 5% VAT and you have to spend more on your driver’s license, parking, insurance and car registration. At the same time, local public transport and international flight charges are exempted from VAT.
Dining at your favorite restaurant with your friends will also be costlier. But since a balance is maintained in many areas, a price hike due to VAT may not affect the common man’s pocket much if he or she approaches the market prudently and handle the situation sensibly.
