Published on : Wednesday, December 27, 2017
Post the implementation of value added tax (VAT) to be effective from Jnauary 1, the UAE residents banking on the public transportation system to commute will not be paying more for using the public transportation.
Dilip Jain, VAT lead at the Institute of Chartered Accountants of India (ICAI) VAT Faculty said that the Public transportation under the Executive Regulations Article 45 are specifically exempt, which includes buses, taxis, and the metro.
The Article 45 lists vehicles like a taxi, bus, railway train, tram, mono-rail or similar means of transport, ferry boat, abra , a helicopter or airplane designed or adapted for the transport of passengers or other similar vessel designed or adapted for the transport of passengers to be exempted from VAT and approved for transport of passengers in accordance with Federal Law No. (20) of 1991 on Civil Aviation.
It was further clarified by Jain that the major transportation’s objective should be with sightseeing, or the enjoyment of catering services, or other forms of pleasure or entertainment, the service will not be exempt from the VAT.
Careem and Uber are used as a taxi for passenger transport so 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.
It was one of the lowest rates in the world at five per cent.