Almost half of all UAE residents are concerned they will not be able to afford the prices rises brought about by the introduction of VAT, according to a new survey.

The poll of 200 UAE residents was conducted by comparison site yallacompare in December 2017. It found that 44.6 percent of participants are “worried” about not being able to afford the increased cost of living resulting from VAT being added to products. Over half (51.8 percent) said they were “slightly worried” about the increased costs, but are confident they won’t feel many effects.

This uncertainty over prices rises was offset by yallacompare’s other findings. The survey found that 62.5 percent of residents expect a salary raise in 2018.

This suggests increased confidence in the UAE economy in 2018. According to the survey, 32.1 percent of residents delayed a big purchase – such as a car or a house – in 2017. But 39 percent intend to make a big purchase this year – despite the fact that VAT may now apply.

In a further boon, over 80 percent of respondents said they are confident of keeping their job in 2018.

Jonathan Rawling, CFO of yallacompare, commented on the findings: “The introduction of VAT is clearly a positive step for the UAE to take as it continues to diversify its economy away from oil. However, it appears that large numbers of UAE residents are simply considering VAT as an additional expense to be dealt with in the short term.

“The fact that the introduction of VAT should result in a more stable economy overall has perhaps been lost on many people. But once the initial shock of consumer prices rising has worn off, we believe that the other benefits of VAT – such as improved government services and greater business confidence – should be clear to the majority of residents.”

Source:www.arabianbusiness.com/politics-economics/387114-vat-almost-half-of-uae-residents-are-worried-about-prices-rises

Input tax may include VAT paid on imports, domestic purchases and any VAT self-assessed by the businesses

In most countries where value-added tax (VAT) has been implemented, tax paid on most business expenses can be offset (or recovered) as input tax, but some expenditures do not qualify for tax recovery.

In the UAE too, some VAT outgo from businesses can be recovered. All VAT taxpayers must distinguish between recoverable and irrecoverable input tax to offset, claim and pay the right amount of tax in their accounts.

Input taxes are value added taxes due from or paid by a VAT-registered person in the course of trade or business on importation of goods, or local purchase of goods, properties, or services from a VAT-registered person.

The UAE’s VAT law has provisions for conditions under which businesses can recover VAT paid on inputs. The UAE law states that the input tax that is recoverable by a taxable person for any tax period is the total of input tax paid for goods and services which are used or intended to be used for making any taxable supplies.

Input tax may include VAT paid on imports, domestic purchases and any VAT self-assessed by the businesses such as VAT paid on the purchase of digital services. Executive regulations on the UAE VAT law specifies supplies on which VAT can’t be recovered such as entertainment services to anyone not employed by the person, including customers, potential customers, officials, or shareholder or other owners or investors.

Purchase of a motor vehicle, rented or leased for use in the business and is available for personal use and purchase of goods or services used by employees for no charge to them and for their personal benefit.

Source:gulfnews.com/business/economy/vat/can-uae-businesses-recover-vat-on-business-expenses-1.2148617