Value Added Tax (VAT) has been implemented in the UAE on the purchase of all new items (with a few exceptions including healthcare, education and food items) from January 1, 2018. The implementation of VAT on the purchase of new vehicles, car insurance premiums and fuel prices has made it difficult to buy and maintain a private vehicle for motorists on a tight budget. Authorities have now announced that VAT will also be implemented on all minor and major car maintenance services across the UAE.
Regular maintenance is an important aspect of owning a private vehicle and the need for maintenance increases even more for old or damaged used vehicles. Maintaining such vehicles has become more costly in the UAE after the implementation of VAT as these vehicles require frequent maintenance and repairs.
VAT to be implemented on all Car Maintenance Services
Motorists must be aware of the fact that 5% VAT is now applicable on all the minor and major car maintenance services that include car repairs, car wash and oil change amongst others. Fuel prices for January, 2018 recorded a new two-year high as a result of VAT implementation and with increased car maintenance costs, owning a private vehicle will become considerably expensive for motorists on a tight budget.
Public Car Parking Exempted From VAT Implementation
VAT will only be implemented on commercial parking facilities, which means that public parking facilities will be exempted from VAT implementation and the parking fares will remain same.
How to Manage Car Maintenance Expense after VAT Implementation?
Motorists on a tight budget will potentially find it difficult to manage their monthly expense after the implementation of VAT on car maintenance services. However, there are some practices that can be followed to limit the financial strain induced by VAT implementation on car maintenance services.
Here is what car owners can do to manage their car maintenance expense after the implementation of VAT in the UAE:
Upgrading an Old or Damaged Used Car
The costs of regular maintenance of old or damaged used cars will increase considerably after VAT implementation. These vehicles can require frequent repairs and managing the maintenance expense of old or damaged vehicles can be challenging for motorists on a tight budget. In this situation, selling such a car and upgrading to a new and fuel-efficient vehicle can be an ideal option for motorists in the UAE.
Also read: How to Sell a Used Car Quickly and Safely to Avail Pre-VAT Based Incentives on New Cars?
Upgrading to an Electric Vehicle
Upgrading to an Electric Vehicle (EV) can be an excellent option for car buyers in the UAE. EVs are an ideal alternative to combustion engine vehicles as they use an electric source to generate power and don’t require traditional fuel at all. In this way, fuel costs can be saved and with benefits such as free charging stations for electric cars located across the UAE, owning an electric vehicle can be a considerably affordable option. The mechanical parts of electric vehicles don’t require frequent maintenance unlike the combustion engine vehicles, which makes the EVs even more affordable as compared to the combustion engine vehicles. In addition to this, the UAE government is offering incentives and benefits to EV owners and buyers to help improve the air quality and reduce the country’s carbon footprint, which makes it an ideal time to capitalize on these government initiatives.
Also read: New Incentive Program Encourages the Buying of Electric Vehicles in the UAE
Frequent Use of Public Transport
Frequent use of public transport can help you to minimize the use of your old or damaged car. Use of public transport will potentially decrease the maintenance expense of an old vehicle and keep your monthly fuel and car maintenance budget in check.
The Way Forward for Motorists
VAT implementation has changed the dynamics of the car market and automotive industry considerably. Motorists should look to adopt the aforementioned practices and try to understand the effects of VAT implementation on the UAE car market, automotive industry and transport sector in order to manage the expenses of owning and maintaining a private vehicle effectively.
If you are looking to sell an old or damaged used car at a fair price, then don’t forget that you can sell any used car to SellAnyCar.com in just 30 minutes regardless of its age, model, make or condition while all the post-sale paperwork is handled by SellAnyCar.com’s team.
