Every dirham counts...
The main expenditures considered as basic needs that eat up a resident’s salary are housing cost, utilities, transportation, food and groceries, school fees and child care.
How far will your Dh1,000 go to sustain your needs?
Most people would answer this saying “it depends” where you spend that amount.
Regardless of which survey or study you look at, while the numbers and rankings may differ, the idea is the same. For example, Dubai was ranked the third most expensive expatriate city out of 13 in the world by Swiss bank UBS earlier this year. According to the ranking, the emirate is the priciest destination in the GCC.
If we are to consider the 2018 Worldwide Cost of Living report by the Economist Intelligence Unit last March, Abu Dhabi is the most expensive city in the GCC followed by Dubai. The global consulting leader Mercer’s 2017 annual cost of living survey ranks Dubai as the 20th most expensive city for expats out of 25 cities, while Abu Dhabi ranked 23rd. We look at what this overall scenario means in terms of cost of living for UAE residents.
On the matter of VAT
The perception that the 5 per cent Value Added Tax (VAT) introduced at the beginning of the year made budgeting harder is not entirely true, says Naveen Sharma, chairman of the Institute of Chartered Accountants of India – Dubai Chapter.
“The VAT rate is very low and the major expenditure item here, which is residential house rent, is exempt from tax. Other basic items that attract VAT will increase the cost of living, but at the same time, the government will use the VAT amount to provide a higher standard of living as well,” Sharma explained.
Inflation rate
The UAE’s inflation rate in the first quarter reached 4.2 per cent, according to data from the Central Bank of the UAE. This increase from 1.8 per cent in the first quarter of 2017 was due to a 5 per cent VAT tax introduced in January.
The Central Bank has not yet released official data for the second quarter, but estimates show the rate has settled into a monthly range of between 3.3 to 3.5 per cent, data from Trading Economics shows.