Dubai: If you’re a fan of ride-hailing apps, get ready to pay a bit more for your trips.
On Thursday, Uber in the UAE announced a 1.7 per cent increase for its rides due to Value Added Tax (VAT) on market services.
“The UAE is undergoing important economic changes with the introduction of a Value Added Tax (VAT). While transportation is exempt from the 5% VAT, the tax does apply to the marketplace services provided by Uber through the app,” said Uber.
The Federal Tax Authority introduced VAT, a broad-based indirect tax levied on the consumption of goods, from January 1, 2018.
With VAT implementation across UAE, the sellers and buyers both need to ensure that VAT is a mandatory part of the invoices. Here are a few important things to consider while making payments. #VATinUAE #mofuae #VAT pic.twitter.com/g0zvjFVxad— Ministry of Finance (@MOFUAE) January 2, 2018
“To reflect these changes, Uber prices will be increased slightly in the UAE. In the coming days, trip fares will increase by 1.7% for all ride options, including uberX, UberSELECT, UberBLACK, UberXL, UberONE and UberVIP,” said Uber
This means that if one trip used to cost Dh100, it will now cost Dh101.7 after VAT.
While the implementation of VAT means a five per cent increase for a number of goods and services, the UAE’s Federal Tax Authority said that the new tax will not affect internal transportation, such as buses and taxis.
The firm Careem also clarified its position in raising the prices of rides, and also attributed the reason to market place services.
Careem’s trips will now be raised by one per cent.
“Under Article 23 of the UAE VAT Implementing Regulations, VAT is applied on any service delivered over an electronic marketplace,” said Careem.
“Since transportation is exempt from VAT but Careem’s electronic marketplace service is not, your ride with Careem will be taxed only on the portion of the fare that is attributable to our marketplace service. This will translate into an average fare increase of 1%.”