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5% VAT to be applied on UAE utilities next year

Electricity and water bills in UAE are set to rise further next year following the implementation of value added tax (VAT) from January 1

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Electricity and water bills in UAE are set to rise further next year following the implementation of value added tax (VAT) from January 1.

A 5 per cent VAT is set to come into force in the UAE and Saudi Arabia on January 1 with the rest of the GCC following by the beginning of the following year. In the UAE, VAT could generate Dh12 billion in its first year and Dh20bn in its second year, according to Sultan Al Mansouri, the Minister of Economy.

Electricity and water utilities will be subjected to the 5% tax, according to recent details about which goods and services will be subject to the levy and which will be zero-rated and exempt.

In Abu Dhabi, water and electricity prices have been rising as the Government reduces subsidies to encourage more efficient use of resources.

The introduction of VAT is set to increase the cost of living by about 2.5 per cent, according to several forecasts, reported The National.

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