Starting January 1, 2018, a five percent Value Added Tax, VAT on petrol and diesel will be administered in the UAE. Thomas Vanhee, the co-founder of Aurifer Middle East Tax, mentioned that while many countries implement different VAT rates for private and commercial automobiles, the UAE will impose one rate only.
Federal Decree Law No. 8 for VAT was announced last Sunday at one of the lowest global rates. The ministry of finance website states that inflation will just increase slightly.
The director of MCA Management Consultants, Girish Chand stated that the low VAT on petrol and diesel will not have a significant impact on one’s spending. Chand also commented that the single rate policy is implemented because the VAT focuses on business activities, not end users.
According to the International Monetary Fund, inflation is expected to reach 2.9 percent next year from 2.2 percent after the introduction of VAT, however it should even out at 2.3 percent in the middle of next year.
The Ministry of Energy regulates the prices of fuel on a monthly basis. In August, the prices of patrol were increased by 3fils, while the price of diesel was jumped by 4fils.