VAT – Everything you need to know as a parent in Dubai

There are several things to look forward to in the New Year, the most important being VAT. The UAE Minister of State for Financial Affairs, His Excellency Obaid Humaid Al Tayer, has stated that the UAE will implement VAT at the rate of 5% on 1 January 2018. The world’s most common form of tax, the value added tax (VAT) is 1) a consumption tax, and 2) placed at the final point of sale. Everybody from companies and consumers, homeowners to tenants and importers to re-exporters will be affected by it in some way or the other. What this essentially means for parents all over the country, is explained here. The good news is that there will be no VAT on school fees essentially. The bad news and just in case you were thinking savings; it will apply to uniforms, school transport, food & beverages at school, field trips and extra-curricular activities. Basic, preventive services at the hospital will be exempt. So while you can bring on the flu all you like, insurance policies barring Term Insurance will be subject to 5% tax. Products that are not medicine or medicine-related will bear the brunt of 5%. Get used to living with the fact that electronics, home appliances, children’s clothes and essentials are going to become dearer, whether we like it or not. Amidst confusion on whether food will be taxed or not, either at supermarkets or restaurants alike; the UAE will apply the upcoming VAT to all food items and utility bills, according to the last word from the officials. Residential tenants can sit tight as there will be no VAT on rents, at least as of now and where the lease is longer than 6 months. For arrangements such as serviced residential apartments, the tax category is yet to be decided and let’s hope it’s not too bad either.