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Impact of VAT on automotive market in UAE


(Source: Khaleej Times)

All you wanted to know about VAT in the UAE.


Value Added Tax (VAT) will be implemented for the first time in the UAE starting 1st of January 2018. It is estimated to generate between AED 8 to 12 billion in the first year. The announced 5% VAT on the purchase of any new item should not be too intimidating for consumers, but it will have a significant impact on car buyers. At one hand, the car buyers will experience a 5% increase in the price of any new car, on the other hand, they will have to pay more for car insurance as motor insurance premiums will also be increased after the implementation of VAT.


Expert Opinions on the impacts of the VAT Implementation on the UAE Car Market.

After the announcement of VAT implementation in the UAE, the automotive experts predicted a unique shift in consumer behaviour that will lead to straightforward impact on the UAE car market. According to some experts, the impact on the rest of the year 2017 could see a spike in sales as buyers’ will obtain vehicle purchases now to avoid paying the additional tax. This means a huge increase in the purchase of new cars. However, automotive experts also expected that the purchase of new cars will witness decrease once VAT is implemented, while in the long term experts thinks that motorists will get used to the new and increased car prices.

The VAT implementation is expected to make customers consider buying used cars instead of buying new cars. Automotive experts think that this is the best time to buy a new car in the UAE, before the VAT implementation, since the customer will have the chance to benefit from buying a new car in 2017 without paying the VAT.

By buying a car in 2017 before the implementation of VAT, car buyers can use the saved money to buy the insurance of the new car, also car buyers can save the VAT on motor insurance. The money saved from avoiding VAT on new cars and motor insurance can be used to buy extra accessories for your new car. Almost all car companies offer a wide range of convenience accessories which can be purchased separately and added to the vehicle. Car dealers are offering new deals and discounts on the purchase of new cars before the VAT implementation in order to attract maximum attention of car buyers. Car buyers expected to take advantages of this.

As a conclusion car buyers can benefit from all these substantial benefits only by buying a new car before the implementation of VAT in the UAE. So it is the car buyers decision to choose between paying more for buying a new car or to buying a used car to stay within budget limits. Veryeasycar.com for sure can help you with this!


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