VAT in Saudi Arabia, UAE to adversely affect 70 to 80 percent of Indian expats

New Delhi, January 4: As soon as the whole world enters in the New Year i.e in 2018, Saudi Arabia and United Arab Emirates (UAE) introduced Value Added Tax (VAT) according to which the general public will start sharing the burden of budgetary expenditure. However, the introduction of VAT in Saudi Arabia and UAE will adversely affect at least 70 to 80 percent of Indians working there and reduce their remittances.

 

The former Indian Ambassador to Saudi Arabia, Oman and the UAE, Talmiz Ahmad on Wednesday while talking to media said that around 70 to 80 percent of Indian community there will be adversely affected as their remittances will be reduced effectively.

Ahmad further said that the size of the Indian community in Saudi Arabia and the UAE is 3 million and 2.8 million respectively and of them, the lower middle class and middle-class sections will get affected the most as they are already feeling the pressure on account of high cost of living.

Ahmad said, “The VAT is introduced on account of rent, medical expenses, school fees, transport and the high cost of essential items which will definitely bring a significant hike in the cost of living.” “The introduction VAT by 5% will have an adverse impact on the labour community which is provided accommodation by the employer and blue-collar workers who are "protected" by their companies would be comparatively less,” he noted.

The former Indian Ambassador said, “As the cost of living in Saudi Arabia and the UAE is quite high obviously low paid Indian expatriates will be adversely affected." He also said that the introduction of VAT by Saudi Arabia and UAE is done due to the fall in oil prices and reduction in employment.

As per the reports, due to low oil prices, the remittances from the Gulf have already come down. Earlier it was about $35 billion which has now gone down to $30 billion. Interestingly, Saudi Arabia and the UAE introduced VAT from January 1 this year. The 5 percent levy is being applied to the majority of goods and services. Petrol and diesel, food, clothes, utility bills and hotel rooms all now have VAT applied.