No VAT for metro, taxis

Residents in the UAE, who rely on the public transportation system to get to work and move around, will not have to pay more for the use of public transportation after the implementation of the value added tax (VAT) from January 1.

“Public transportation under the Executive Regulations Article 45 are specifically exempt, which includes buses, taxis, and the metro,” said Dilip Jain, VAT lead at the Institute of Chartered Accountants of India (ICAI) VAT Faculty.

As per Article 45, the following are exempt from the VAT: A motor vehicle, including a taxi, bus, railway train, tram, monorail or similar means of transport, designed or adapted for the transport of passengers; a ferry boat, abra or other similar vessel designed or adapted for the transport of passengers; a helicopter or airplane designed or adapted for the transport of passengers and approved for transport of passengers in accordance with Federal Law No. (20) of 1991 on Civil Aviation.

Jain, however, clarified that when the transportation’s principal objective has to do with sightseeing, or the enjoyment of catering services, or other forms of pleasure or entertainment, the service will not be exempt from the VAT.

“Where Careem and Uber are used as a taxi for passenger transport; the service will be exempt and no VAT would be chargeable.”

The President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, has issued the Federal Decree-Law No. 8 of 2017 for Value-Added Tax, with one of the lowest rates in the world at five per cent.