VAT: a new era of certainty and an end to the age of the unknown

The days of speculation have come to an end as value added tax becomes part of our lives today

Abu Dhabi, United Arab Emirates - December 30th, 2017: People shop in Abu Dhabi before VAT starts in the new year. Saturday, December 30th, 2017 in Abu Dhabi. Chris Whiteoak / The National

We've been talking about it for months and now a new year brings a new era: value added tax has become part of our daily lives. Over the past week, our reporters have watched residents stock up on goods and essentials in an effort to avoid higher prices. We've spoken to shopkeepers and business owners as they prepare for the new tax. We've looked at fiscal psychology and how it affects consumer thinking. We've detailed the impact the tax may have on some of the essentials of our daily lives, like petrol, which will increase in price by four per cent this month once fluctuations in the commodity price and the uplift for VAT have been taken into account. We've also tracked how the introduction of such regulations have changed the economies of other countries. In the UK, for instance, VAT raises more revenue for the government than any other indirect tax. In the last tax year, £124 billion in 2016-17 was collected in Britain. It is estimated that Dh12 billion will be raised through VAT on these shores in its first year.

Until now though, the fear of the unknown has chipped away at the collective conscience of the nation as residents and citizens have fretted about how much their lives will be impacted. The suspicion has been quite a lot even if no one could be sure. Thankfully, among other things, today will bring certainty.

What else will it bring? The new tax will require businesses to have a more rigorous view of their accounts and budgeting. It will give government a clearer perspective on the drivers of the economy and it is regarded by the International Monetary Fund as a necessary step for any economy to take. To certainty then, we should add transformation. At the same time, we shouldn't overstate the shift. As a government minister reminded the FNC last month, the tax will have a relatively minor impact on investors and consumers. This is then a new chapter in the rapid evolution of this country, one that this newspaper will track with great interest.