Residents across the UAE have voiced their concerns about living costs rising in the UAE as a result of the value added tax; however, many are also hopeful about receiving a salary increase in the new year.
According to a recent survey from yallacompare, around 44.6 per cent of residents are worried about not being able to afford the increased cost of living as a result of VAT being added to products. Over 51.8 per cent said they were slightly worried about the increased cost of living, but are confident they won’t feel many effects. Just 3.6 per cent said that they aren’t worried at all about prices going up as a result of VAT.
“The introduction of VAT is clearly a positive step for the UAE to take as it continues to diversify its economy away from oil. However, it appears that large numbers of UAE residents are simply considering VAT as an additional expense to be dealt with in the short term,” said Jonathan Rawling, CFO of yallacompare.
“The fact that the introduction of VAT should result in a more stable economy overall has perhaps been lost on many people. But once the initial shock of consumer prices rising has worn off, we believe that the other benefits of VAT – such as improved government services and greater business confidence – should be clear to the majority of residents.”
Yallacompare’s survey also found that 62.5 per cent expect a salary raise in 2018. This suggests increased confidence about the ability to financially thrive in the UAE in 2018. According to the survey, 32.1 per cent of UAE residents put off a big purchase – such as a car or a house – in 2017. Of these, though, 39 per cent will make a big purchase in 2018 – despite the fact that VAT may now apply to that purchase. And of those who did not put off a big purchase last year, 40 per cent expect to make one this year.
Similarly, the 2017 Bayt.com Middle East and North Africa Salary Survey found that 44 per cent of UAE respondents believe that salaries are increasing in the UAE, while 24 per cent believe that they are staying the same. According to respondents, factors causing salaries to increase include good corporate performance/increased profitability, inflation/rise in the cost of living, and growth in opportunities and economic growth in the country.