How VAT affected the Automobile Industry in UAE?

How VAT affected the Automobile Industry in UAE?

VAT, short for value added tax is implemented on goods in many countries for the development of the economy. But, it is implemented for the first time from 1 January 2018 in Dubai. It has significantly affected the sales of almost every industry. Now owning a car in the Dubai has become more difficult for a person as it involves many other sturdy expenses along with VAT like insurance, fuel, parking, and maintenance.

If you are looking forward to buying a car, but your budget is less, then you can choose to buy a second-hand car in Dubai. You can find many dealers who can help you to get your dream car within your budget. Before you choose to buy a car, you need to know how VAT has affected the sales and prices of cars. In this guide, we will discuss the effects of VAT on the automobile industry.

Effects of VAT on Cars:

1.Cost: Sales of vehicles subjects to VAT in the GCC. VAT implementation on the car depends on whether you are purchasing it from an agency, a dealer, or directly from an owner. You have to pay 5% VAT if you are buying a new car or a second-hand car registered under a dealer or an agency, but there is no VAT if you buy it directly from an owner. If you have taken a bank loan, then there is no VAT applies to car loan installment.

2.Annual and Consumption costs: While VAT does not apply to car license registration and inspection fees, but due to increase in their renewal fee the prices of cars are increased since December 2017. Vehicle cost is also enhanced as 5% VAT is also applicable to your car insurance and reinsurance and petrol, diesel and other oil and gas products.

3.Car Maintenance: Service and repair cost of a car has been increased with the application of VAT as it enhances the prices of the oil change, car wash, etc. It also affects the prices of vehicle spare parts. It is recommended to buy a car insurance policy as your car repair cost will be more now, it will be higher in case of accidents.

This is how the VAT affected the motor market in UAE. It can be estimated that there will be a decline in the number of car sales. If you are looking for a dealer who can provide you the best car at affordable prices in Dubai, then Steerzy can turn out to be the best option.

shivam aggarwal
4 months ago


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