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UAE Rules out the Intention to Raise VAT and Excise Rates

VAT in UAE as a Short Review

The UAE has been dealing with value-added tax (VAT) since the first day of the year 2018 with a 5% rate. Excise Tax, on the other hand, has been introduced since 1 October 2017, 50% on energy and carbonated drinks and 100% on tobacco goods. Many or all corporations have sought help from VAT consultants in Dubai.

The VAT has been applied to almost all goods and services, with few exemptions as per the VAT laws. With this, the cost of living has increased in a slight manner. Budgeting is now an option that people should opt for, especially when the lifestyle of spending is still being applied in their lives.

The VAT was implemented to provide a diverse source of income for the United Arab Emirates (UAE). The revenue that will be generated from both kinds of taxes will be used to provide more effective services for the residents of the country. The public infrastructures and facilities will be improved. This way, the notion is utilized to help not just the country to soar but for its residents to be more comfortable and at home. This can also help the country to not be dependent the oil revenue since a new source is being used.

Most people saw this quite worrisome since it will add to the financial problems that most have been dealing already even before the taxes came into the picture. Regardless, taxes have entered the country, with the residents starting to wonder where this implementation will most likely end up going. Will there be more taxes to come in the future?

There is No Raise VAT Rate in Dubai

There has been a lot of speculation that has been going around even before the taxes were implemented in the country. The people have been wondering if it will double after a year or if the income tax will be introduced as well. People have been reading into and hearing a lot about the things that might happen with the start of taxes in the UAE. Because it’s the first time that the UAE has implemented tax since its existence, it’s been greeted with a lot of worries because of what it might ensue.

However, a week ago, a UAE minister has closed the doors on the rumours of the increase of taxes in the coming years. People can rest assured that their the worst-case scenario about taxes in the UAE is not going to happen in the years to come. Also, it has been also confirmed that income tax is not about to be issued by the government.

It should be noted though that the government is planning to introduce the corporate tax, as they have already started the steps in making a law on the said tax. Even if they are only in the early stage of doing so, it is advisable that businessmen should prepare themselves for this coming wave of tax.

Continuous Savings

Not everyone knows how to save but everybody knows how to spend. It may even be easier to the latter than the former. More often than not, we are only good at the start of doing it. However, since the taxes are now implemented, there is a slight shift in the way we should spend.


It is essential that one should list all the monthly expenses. This includes the payment for rent, transportation, food allowance for a month, any loan or credit card payments, groceries, money that should be sent to your family in your home country, etc. Keeping track of expenses and ensuring that they are mostly fixed is helpful in your plan to save. Accounting for every cent or fil will be more helpful. You can simply round off or add 5 to 10 dirhams as an allowance.

When you have this data, you can easily go to the next step.


Budgeting is simply ensuring that you are spending just enough for a month and making sure that you have enough resources for the expenses that you need to be paid. This is where you will find out if you are overspending on miscellaneous or groceries or some other aspects in your data expense.

Set Aside Savings

You should have at least 20% of your income to go to an emergency fund for when you need it badly (like losing a job) and 20% of your income to go to your savings. If that is not possible, your budget for your leisure and groceries should be cut back. In this way, you can have two kinds of savings that will help you in the long run and when you need it.


FAR – Farhat Office & Co. has been in the industry for more than 30 years. We are one of the leading VAT consultants in Dubai.

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.