There is just a month left for 5% VAT to be levied on products and services. But everyone is totally aware of what impacts VAT will have on their savings. UAE is one of the best destinations for everyone who wants to earn and save before bidding a goodbye to UAE. But now VAT is going to take a toll on their funds.
Related: FTA provides opportunities for tax agents and tax accounting software vendors in UAE
According to the financial advisors even though VAT will have its effects, it is totally upon the individual to be unaffected by the tax. VAT in UAE is less compared to other countries. Certainly 5% would make a difference but not so huge, where other nations are imposing more than 10% tax. So for the expats, this will not affect much as they have already paid taxes back in their homeland. Still, for everyone, this will make a slight difference in their incomes which would indirectly affect the savings. Taking everything into the consideration the experts have suggested few tips to handle VAT and not let it affect your expenses heavily.
10 Tips given by financial advisors in order to save on VAT
Extra Expenses- The very first thing needed to be followed is cut down the extra expenses.
Savings- Try to put at least 5% of your income into savings.
Read: How much expats know about savings in UAE
Investments- Rather than letting your extra cash stay in your bank accounts, make some investments which will generate some profit.
Say yes to home food- Try to save on food by cooking at home instead of dining out regularly.
Save Electricity– Save on electricity consumption by switching off lights and fans when not in use.
Save on travel– Book your travel tickets as early as possible.
Check local markets– Start purchasing your groceries in local markets instead of supermarkets.
Go fresh and cheap– Buy fruits and vegetables from local markets for lower prices.
Say no to your personal vehicles– Prefer public transport like bus, metro, trams etc whenever possible and save on fuel.
Download free mobile apps– There are various mobile apps which helps you in saving your money on shopping, dining, movies and can be a financial advisor too.
Check: Top 5 mobiles apps to save money in UAE
#3 Bonus points
#1 Go to a good school for low fees– School fees will consume more than half of your earnings, so check and shift your kids to a better school for a less fee comparatively.
Check: Best budget schools in Dubai
#2 Reduce AC consumption– Cut down AC as much as possible as this will have a greater impact on the power bills.
#3 Rental Check– Check whether you are paying correct rent for your house, if not try negotiating with the landlord as house rent takes away the maximum part of your income.
Check: Rera Rental Price Calculator and Calculate your rent
All these tips may seem simple but will have a greater effect on your cash flow, if followed. These steps will not only help you in balancing your income after VAT is imposed but also helps you in saving more money than you usually do. Most of us are aware of how important savings are but do not know how to start, so get a better understanding of savings and don’t let VAT have a negative impact on your goals and future.
About the author
Nikitha is a Senior Analyst at MyMoneySouq.com. She has been writing about personal finance, credit cards, mortgage, and other personal finance products in the UAE. Her work on Mortgage loans has been featured by the GulfNews and other popular Financial Blogs in the UAE.
