Latest VAT news: banks and car parking

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Although there are just several days for January, 1, 2018 left, when the VAT is coming into force in the UAE, many questions still remain. Residents of the UAE tries to learn how the VAT will reflect to their interaction with banks. Experts answer there is no reason for worrying.

The VAT will be levied only on the fee charged by the banks, which is a nominal amount of AED2 per transaction.

Customers will not be charged five per cent VAT on the amount withdrawn from ATMs other than their own bank, rather only on the Dh2 fee charged by the banks, according to tax experts.

When people withdraw from their account, there is no transaction, so VAT does not apply in such case.

 

There are some questions about paying VAT on parking. The experts answer:

VAT for parking cars will be charged if the service passes a separate account from the rent.

Otherwise, if the owner of the premises includes payment for parking for rent, and parking services are included in the lease, then residents are exempt from value added tax.

Owners of those premises that were specially built for parking cars, will levy a tax on end-users. It should be noted that parking fees can be assigned as tenants’ obligations in the contract. However, in any case, the VAT payer will be the owner of the parking lot.

The obligation to pay VAT can be transferred directly to the lessee, such a provision should be separated in a lease contract. Parking in commercial premises will also be subject to VAT of 5%.

Most likely, public transport is exempted from VAT for parking services, but this issue is not regulated by regulatory enactments and will be specified by the government in the near future.
UAE has reached a very high level with respect to the legislative aspects of the tax system, which is one of the best in the world.
Tax legislation and procedures will strengthen the economic development of the UAE and will enable them to become a real competitor for the countries of the developed world. This will be made possible by resources to support the expansion of key sectors and the provision of better services.

Introduction of VAT in the United Arab Emirates will have a positive impact on the economy of the country.
In the UAE, the VAT can bring the economy 12 billion dirhams ($ 3.26 billion) in the first year and 20 billion dirhams ($ 5.4 billion) in the second, according to Sultan Al-Mansuri, the economy minister.

Revenues from VAT significantly supplement budget, they can be used to provide high-level public services. Also, an increase in the budget will help reduce the dependence of the country’s economy on the sale of raw materials, such as oil and other hydrocarbons.

The introduction of VAT next month will be a great innovation for consumers and companies long accustomed to minimum taxation in the Persian Gulf.

Experts suppose that some consumers will deliberately try to make as many purchases as possible in December to avoid overpaying due to the inclusion of a tax in the price – this behavior may lead to a small economic recession early next year when expenses are reduced.
But after the completion of the initial restructuring, it is expected that the system will run smoothly, because the government has done for it a tremendous amount of work.