DUBAI: Both water and electricity will be taxed at 5 per cent from January 1, 2018, according to a set of draft executive regulations published on the Federal Tax Authority’s website on Wednesday.
According to the document, water and electricity will be treated as supplied goods, and therefore subject to a 5 per cent value-added tax (VAT).
This category of taxable goods are defined in the regulations as the “supply of water and all forms of energy including electricity and gas … whether used for lighting, or heating, or cooling, or air-conditioning or any other purposes”.
“From the beginning, it has been clear that when we talk about power and water, there’s no specific exemption or zero rating,” said Julie Bronzi, a senior VAT manager at PricewaterhouseCoopers (PwC).
“It’s not out of the blue,” she added. According to Bronzi, until recently many people were still wondering if public entities like Dubai Water and Electricity Authority (Dewa) would be subject to VAT.
“I think it’s clear for now that there’s no exemption, which is not surprising as it’s the same in Europe, where electricity and water are subject to VAT,” Bronzi said.
The expert was quick to stress that since Wednesday’s draft executive regulations had been retracted, they should be taken with a pinch of salt.
