Dubai: The UK's "most abused tax" could become even more elusive with the increase to 20 per cent introduced yesterday.
"It's probably the one tax that's abused the most in the UK, because people want to avoid it the most," David Burns, Director, UHY in Dubai said of VAT (Value Added Tax).
Britons see VAT like a "purchase tax" he continues, "if there was more education in the UK about it, then I think people would understand it a bit better".
The tax isn't just unpopular with consumers, however. Some retailers deliberately don't charge their customers VAT to attract spenders to cheaper produce.
The effects are of the increase are already evident, with shoppers splurging in the period between Christmas and the tax increase in a goal to save money.
Burns, however, says it is a good move by the UK government: "The first time I came across VAT was in Norway, and it was a way to regulate retail purchases — it was a good balancing mechanism.
"It can go up, but it can also go down again. It might not go down in the foreseeable future, but it can be put back down again," the Dubai resident said.
Spending power
Britons avoiding tax in the UK might present opportunities in the UAE retail market while on holiday, however, "as long as our retailers aren't marking up too much," Michael Scully, MD, Seventides, said.
He continued that while the cost of a holiday for the average British tourist might increase, "the increase will be marginal," because it won't be added to the hotel accommodation or flight costs.
There will be very little effect to the up-end of the market and the business travel side, he said.
Therefore, tourism to Dubai and spend in the emirate will have incur a "negative and positive effect" from the VAT increase.
The VAT will not only affect British consumers, but visitors and tourists too. This is not something that another British expatriate agrees with: "I honestly feel that asking the British public and visitors to the country to shell out one fifth of a purchase price to help a government-induced debt burden for very little ‘value added' is not really giving what ‘it says on the tin'.
Indeed, even if there was some tangible value added alongside the tax demand, it remains an uncomfortably high percentage from where I stand," Susan Furness, CEO, Strategic Solutions, said.
The UAE does have a wonderful infrastructure across almost all services and requirements that may be demanded by today's inquisitive, intelligent lifestyle consumer — be it for personal or corporate ‘shopping'," she continued.
