Myths and misconceptions surrounding VAT

With the onset of the New Year, a five per
cent levy on most goods and services was introduced in the UAE in the form
of Value-Added Tax (VAT). While marketers took advantage of this
opportunity to sell goods and services in abundance, customers had no idea
that a product or service purchased in 2017, but delivered in 2018 was yet
applicable to tax.
“Marketers used VAT as an essential tool to encourage unwanted purchases.
The fine print details were not revealed, which have not only outraged the
customers, but also shattered the trust of many loyal customers. The
introduction of VAT was considered to be phenomenal, and the public was
under pressure. Taking advantage of this, marketers tapped their profit
margins,” said Mohammed Fathy, General Manager of Dubai-based
consultancy, Al Dhaheri Jones & Clark.
Commencing January 1, 2018 a five per cent levy was imposed on most
industries, including food and beverages, utility bills, private transport
services, hotel services, entertainment, electronics, school uniforms,
commercial rents, cars and jewellery, among others. However, education
services will be exempt from VAT if run by a recognised institution and offers
a recognised curriculum.
All six GCC countries agreed last year to introduce VAT, only the UAE and
Saudi Arabia have said they will implement the new tax starting from
January.