Needs not wants now the post-VAT priority for expats in UAE

Published:  22 Jan at 6 PM
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Tagged: South Africa, UAE
Just three weeks after the introduction in Abu Dhabi of VAT, shoppers are cutting back on impulse buying.

Both expats and locals in Abu Dhabi are reducing their spending on luxuries and cutting back on impulse purchases in an attempt to balance their household budgets since the introduction of VAT at five per cent. A Gulf News survey of shoppers in hypermarkets and malls has revealed a change in shopping habits across the board, with many expats saying they’d cut down their weekly spend by at least a third since the beginning of the month.

Several said they’re taking economising a step further by maintaining their older cars rather than buying new, avoiding luxury purchases and cutting down drastically on buying more food than is needed. Shoppers who used to ignore the price tags of their purchases are now into price comparison by brand, with one saying buying the cheapest brand is now the sensible option, especially for families. Others pointed out VAT is now being charged on all services and commodities, making economising on all fronts essential to avoid financial problems. In general, those interviewed stressed needs rather than wants as their new shopping policy.

One expat from the Philippines working as a senior laboratory analyst said people have three basic needs, shelter, food and clothing, with food and shelter the major priorities. He’s rejecting all luxury items, shoes, clothes and electronics in order to concentrate on nutritious food for his two children, as well as on his rental charges. Another will no longer change in his car for a new model every five years or so, and twice-weekly dining out is off the menu.

Time will tell as to the success of VAT in the UAE as a revenue stream for the government, as cutting back on a large scale by a huge number of expats may well reduce retail company profits, resulting in their paying lower tax bills in the future. Together with the effects of October 2017’s 50 per cent excise duty slapped on carbonated rinks and the 100 per cent duty on energy drinks and tobacco, the UAE government may well be in for an unpleasant shock.
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