UAE residents consider VAT to be a challenge, but are largely optimistic about the year ahead, a YouGov survey revealed. The results found that 50 percent of residents have positive sentiment towards the UAE for 2018, while 34 percent are neutral and 15 percent are negative. Some 62 percent of residents feel the introduction of VAT will be a challenge for the country.
The survey was conducted in the first month after the introduction of Value Added Tax. It covered over 1,000 UAE residents to understand their sentiment towards the country, and the immediate impact the new law is having on the community at large.
The study indicates residents are, for the most part, undecided over its impact on the economy. Whilst over a third of the population (38 percent) feel it will have a positive impact, 40 percent neither agree or disagree with the statement, while 22 percent disagree.
The results suggest this perception, in part, is born out of the levels of increased expenditure expected, with 44 percent of residents claiming their spending will increase significantly as a result of the tax, and the same proportion (44 percent) feel it will reduce their disposable income.
To that end, the majority of residents (46 percent) believe people will expect a relative pay rise to compensate for their increase in expenditure as a result of VAT.
Generally, over half of residents expect to spend more money in 2018, with most claiming they’ll need to find the most extra cash for utility bills and their daily commute/fuel (both 49 percent) and groceries (48 percent).
Whilst they are more certain of the impact of VAT on their personal expenditure, residents are less sure about the impact of the tax on financial dealings among companies. When asked if they think the new law will regularize bank lending to SMEs, the largest majority, (55 percent) neither agree nor disagree with the statement, whilst 28 percent agree it will and 17 percent disagree.
When asked about the impact of VAT on visitors to the country, 35 percent of residents say it will discourage tourists, yet the largest proportion are unsure (37 percent) and 28 percent say it won’t. However, a little more believe it is more likely to discourage expats (42 percent), while 38 percent don’t know and 21 percent say it won’t.
Interestingly, when it comes to handling VAT in everyday life, 45 percent of residents believe the need for low denomination change will complicate simple cash transactions for consumers. The tax has also got residents thinking about what else is next. Over half (54 percent) said the introduction of the new law has made them question whether income tax will be enforced in the UAE in the future.