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Top 3 FAQs about the UAE VAT Implementation
Top 3 FAQs about the UAE VAT Implementation
Top 3 FAQs about the UAE VAT implementation

With only half a year left before the implementation of the 5% value added tax (VAT) in the UAE roll out, a lot of questions about its regulation are still hanging in the air. We compiled the top three frequently asked questions and try to answer some of it.


  1. Will the cost of living in the UAE go up?

Yes, but this will depend mostly on the individual’s lifestyle and spending habit. While the cost of living is expected to go up a notch, don’t panic, it will be a very minimal adjustment as there will be limited taxable items in the market. In fact, Gulf Cooperation Council (GCC) states already agreed to exempt about 94 food products. Similarly, medical and educational bills are not affected unless there’s a hike in prices.

  1. What should businesses need to do in order to prepare for VAT?

Essentially, businesses are highly advised to prepare a strategic business plan  and carefully assess the impact of this change. As stated by the Ministry of Finance (MOF), “We believe that businesses may need to make some changes to their core operations, their financial management and book-keeping, their technology, and perhaps even their human resource mix (e.g., accountants and tax advisors).”

  1. Will the airline and tourism industry get affected?

Currently, it’s still unclear whether the airfare will increase since the law hasn’t hit the ground. However, given that most countries exclude VAT on airfares, it’s probably seen to get off the hook. We’ll have to wait for further updates from the MOF on that one. Nevertheless, tourists are advised to double their pocket money as their purchases will not be exempted from VAT considering that the tourism industry is one of the major sources of UAE’s revenue.

These are just a few of the most asked questions and we are on the lookout for more updates from the government regarding the tax procedure bill. Get your business ready for the coming year, know more about how you can prepare and adjust. Contact us to learn more about our VAT consulting services