Heads up: It turns out ALL food is going to be taxed under VAT
Water and electricity bills will also be subject to the 5 per cent tax…
More details have emerged about what will be subject to the value added tax (VAT) in the UAE.
From January 1, all types of food – including staples like bread and rice – will be taxed, Gulf News reports. This is significant because it was previously thought that certain essential food items would be exempt from the 5 per cent tax increase.
But that’s not all – according to The National, water and electricity will also be subject to the tax. Other services like public transport, international air travel, education and healthcare will be exempt.
Meanwhile, tourists to the UAE are expected to be able to claim back the VAT on purchases they make in the country (we imagine this will work in the same way as the GST refunds for tourists in countries like Singapore).
The UAE also introduced an excise tax in October, which saw the price of soft drinks, energy drinks and cigarettes rise by up to 100 per cent.
After VAT has been introduced, the overall cost of living in the UAE is expected to rise by about 2.5 per cent, it has been estimated.
Feeling confused about VAT and how it will affect you? Be sure to check out our handy guide which tells you everything that residents need to know about VAT in the UAE (and we’ll be sure to update you with any new details that come in).