VAT in UAE: residents say tax on water and electricity will add to rising utility bills

Providing safe and sustainable access to clean water is perhaps one of the greatest challenges of our time. Mona Al Marzooqi / The National

Tenants and homeowners say the new tax added on to utility bills next year will further hit their household budgets after recent hikes in some emirates.

From January 1, the 5 per cent value added tax (VAT) will come into effect and be added to a range of products services. A breakdown released on Wednesday for the first time confirmed it would affect including food, clothes and utilities.

Families in large villas, in Sharjah and Ajman in particular, have already seen their bills double in recent months.

“My total bill every month ranges between Dh2,000-2,500 as I live in a villa, but I was shocked when I received a bill of Dh5,276 for September. I am afraid the next month bill will be either the same or even higher,” said Aida Salem, 40, a resident of Ajman.

“Such unusually huge utility bills add much more burden to our already rising expenses,” said the mother of two daughters.

Mrs Salem said that “if this is the way now, what we would do when VAT comes in".

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VAT in UAE

Water and electricity bills to be subject to 5%

Tax in the UAE: Everything you need to know about VAT and a little bit more

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Sharjah and Ajman's utility companies encourage residents to use AC sensibly, including shutting it off when not at home. They also suggest installing new, modern bulbs and conserving water.

Younis Mohammed, another Ajman resident and a father of three children, has received bills of about Dh1,000 to Dh1,800 for the past six months.

Until then, he used to pay an average bill of Dh800, while Ali Kamal, a Lebanese resident in the Al Taawun area of Sharjah, said: “I always pay between Dh500-600 for a monthly bill. But I have paid Dh1,036 this month; almost double the amount I have been paying since I have lived in a one-bedroom apartment in two years ago.”

“It is not only me, most tenants in my building received inflated bills,” he added. We already pay high rents plus the annual attestation charges for tenancy contract, which increased from 2 per cent to 4 per cent from last year,” he added.

Mr Kamal was surprised that his power was disconnected on November 8, 2017.

“I visited a Sewa office to ask why they disconnected electricity in my apartment, as they only disconnect the power for those whose bills exceed Dh1,000. I found out that my one month bill is more than a thousand in only a month. Although my wife and I outside the apartment for at least 10 hours, as we are working. Also, we rationalise our power consumption by switching off lights and air conditioners most of the time,” said Mr Kamal.