Vehicles owners do not only have to pay more for their fuel but also have to spend extra on their car maintenance as services like car washes, and oil changes will be costlier than before.
According to Dilip Jain, Principal VAT at Nimai Management Consultants, “Petrol is liable for VAT”. Also, all services in the UAE are subject to VAT like car repairing services, oil change, and car washes. RTA car parking – being part of the public transport system – is likely to be exempt, but clarification is awaited. Parking takes a different meaning: where it is provided as part of the renting out of the residential property, it will be exempt; but parking in commercial buildings, RTA parking building, will attract the five percent VAT.”
Girish Chand, director MCA Management Consultants said that the fuel comes under a business activity, so it will involve VAT. “However, considering the low VAT rate and the insignificant composition in the overall spending of an individual, VAT on petrol and diesel would have a negligible impact,” Chand mentioned.
IMF has predicted a rise in inflation next year owing to the introduction of the VAT. The prediction is 2.9% inflation rate, which will be a 0.7% increase compared to 2017. However, inflation will stabilize at about 2.3% in the mid of 2018. Specialists believe VAT on passenger and commercial vehicles won’t differ since the tax is levied on the business activity.