UAE residents to pay 5% VAT on bottled water

The consumption of bottled water will also be subject to five per cent value-added tax (VAT) from January 1, 2018.

Girish Chand, director, MCA Management Consultants, confirmed that VAT would be levied on bottled water as well as on the electricity and water bills.

The Dubai Electricity and Water Authority (Dewa) on Wednesday said that with effect from January 1, 2018, the residents' consumption bills will reflect five per cent VAT in compliance with the Value Added Tax (VAT) Law 8/2017 and its Executive Regulations.

However, VAT is not applicable in respect of housing fee, sewerage fee, and irrigation fee, collected by Dewa on behalf of Dubai Municipality. Knowledge fee and Innovation fee are also exempted from VAT, the utility said on its website.

The Federal Electricity and Water Authority (Fewa) in the UAE said VAT would also be levied on the consumers' bills, especially electricity bills, effective from January 1, 2018.

In addition, food items will also be subject to five per cent VAT. According to Euromonitor International figures, the UAE residents are expected to spend about Dh103.11 billion on F&B in 2017.

Analysts believe that VAT will not have a big impact on the cost of living in the country as the rate is one of the lowest in the world.

Among other countries around the globe, Denmark has placed VAT at 25 per cent, Morocco at 20 per cent, Tunisia at 18 per cent, Algeria at 17 per cent and Jordan at 16 per cent.

The introduction of VAT will help the UAE government to generate an estimated Dh12 billion worth of revenue in the first year, which will increase to Dh20 billion in 2019.

The UAE and Saudi Arabia will implement VAT from 7am on January 1 under the framework agreed among the GCC countries. While Oman and Kuwait have decided to postpone it till 2019.

The introduction of VAT will help the UAE government to generate an estimated Dh12 billion worth of revenue in the first year, which will increase to Dh20 billion in 2019.

waheedabbas@khaleejtimes.com