Taxing utility bills in line with international trend: Experts

— The UAE’s impending value-added tax (VAT) will also be applicable on utility bills including electricity and water, as well as on mobile telephony and Internet bills, Khaleej Times has learnt.

Clare McColl, a partner at KPMG Lower Gulf, said VAT on utility bills will be in line with the international trend. “Based on international practice, we could expect 5 per cent VAT to be added to utility bills,” she said.

David Stevens, VAT Implementation Leader, EY, told Khaleej Times: “While VAT will apply to utilities, such as power and telecommunications, the overall impact on inflation should be around 2 to 2.5 per cent spread over the first year of introduction,”

When asked, the Ministry of Finance neither denied nor confirmed the report, and said that it will soon clarify the VAT implementation process in a Press conference.

The UAE will join the club of nearly 150 nations by implementing a 5 per cent VAT in the country from January 1, 2018. The new tax, which is part of a move to diversify the country’s revenue sources, is likely to generate Dh12 billion income in its first year of introduction, and may collect up to Dh20 billion in 2019.

The UAE is expected to exempt 95 essential items from the new consumption tax. It is expected that the food items including 30 types of fish, health, education, bicycles and social services would be exempted from the new consumption tax.

The new tax will be charged on items such as electronics, smartphones, cars, jewellery, watches, eating out and entertainments, among others. According to EY, the VAT is expected to produce revenues of over Dh92 billion per annum for the six GCC countries.

While VAT will apply to utilities, such as power and telecommunications, the overall impact on inflation should be around 2 to 2.5 per cent spread over the first year of introduction.” David Stevens, VAT Implementation Leader, EY,