While talent hunting, all Saudi and UAE recruiters could proudly say that these countries are ‘tax-free countries’ but not anymore. The leaders of the region have decided to impose a 5% tax for everyone. Also known to the world as Value Added Tax (VAT). This tax is charged because of the oil price collapse, three years ago, to boost revenue.
The reason for this newly started tax acquiring is to boost revenue. The five percent tax applies to most goods and services, offered by the two countries. But this new addition for boosting the revenue for the states is not taken lightly by the citizens. With Dubai Shopping Festival just around the corner, shoppers (specially bargain hunters) are rethinking their shopping-spree strategy. Most people flocked around for the DSF, hailing from all parts of the world because of the surprisingly low, retail prices offered on all products during the shopping festival.
According to the government analysts, this VAT will result in a collection of $21 billion for the year 2018 (only). This tax will be applicable to items like food, clothes, electronics and gasoline. As well as phone, water and electricity bills for the citizens. Higher education is also going to be taxed. There are also some exemptions from the VAT, namely, real estate sales, rent, (certain) medicines, school tuition and airline tickets.
Other Gulf countries, Bahrain, Kuwait, Oman and Qatar, have decided to wait till 2019 to apply the VAT.