A Little Bit Of Gas A Little Bit Of VAT

(Photo credit: Wikipedia)

We got back off leave to the much-awaited introduction of Value Added Tax in the UAE. VAT is very much a fact of life in the UK, where it is charged at a charming 20%. The UAE's 5% pales in comparison but it remains that most unwelcome of innovations - a tax.

Living for 25 years in a 'tax free' environment has been something of a privilege, I know. It has long amazed me that here we have an economy capable of functioning (and no, it's not about oil) without gouging its citizens for 25 or even 40% of their earnings. When you look at how little you get back from the UK government for all the taxes, fees and levies we pay, the UAE model is pretty compelling stuff.

But last year we saw the soda and fag tax (no bad thing, mind, although it does rather tend to hit one hard in the Fevertrees) as well as a rise in the property registration 'fee' in Sharjah from 2 to 4 per cent (because a payment to government leveraged as a percentage of a transaction is a fee and not a tax, you understand) and now the dreaded VAT is here. The background noise of expats moaning has increased as a consequence, but there's no doubt that it has sneaked a lot of cost overnight into a life already become more expensive.

VAT was the last thing on my mind the other night as I was cooking dinner, especially as the gas started to gutter. Having refused Sharjah Electricity and Water's cunningly worded invitation to give them Dhs 1,000 and the blood of our firstborn each month thereafter, we still rely on Fast, Faster and Faster Than Fastest gas and they duly rocked up soon after my call. Dhs130 for the gas and Dhs7 VAT, the chap informed me as he rolled the cylinder around to the back of the house. Tired and frustrated by the derailing of my sumptuous gastronomical event, I paid without demur. Only later did I stop to reflect that the wee swine had a) rounded it up to the nearest dirham b) taken VAT in cash without offering a VAT receipt. Guess where that Dhs7 is going (and I'm betting it's not the MoF!)?

I must confess I'd expected the introduction of the new tax to be an Emirates ID style disaster and I appear to have been wrong in that - things seem pretty fluid in comparison. The overhead for businesses, mind, is significant. Not only is there the additional cost on 'value added', but the auditing and compliance costs are significant. One aspect I hadn't considered was outlined to me by a pal the other day - cashflow. Her business tends to run on big ticket contracts and payments rarely take place within 90 days. Paying VAT on each quarter's invoices means she's going to take a huge hit up front.

That's not going to worry the lads over at Faster Than Fast, of course. Firmly embedded in the cash economy, they're likely laughing all the way to Al Ansari to send all that lovely VAT back to Swat to fund the construction of legion sprawling mansions...

I'm A US Taxpayer

Image via Wikipedia

Of the many strange pathways that this writing thing has opened up, perhaps the strangest is that I am to become a US taxpayer. 30% of any money I make from selling the print copies of Olives on Amazon.com will be paid as a 'withholding tax' to Uncle Sam, because I am resident in the UAE.

As a UK resident, I could have filled in a mountain of forms and qualified for the 0% tax rate that applies across both countries,  but then I would of course be liable for UK income tax.

I must admit, the very concept took quite a lot of sinking in. I'm not terribly used to this tax malarkey, living as I do in the tax-free paradise that is the UAE. And I'm not sure I will always approve of how the US government intends to spend my money. But there's little I can do - the tax applies to any monies made on the US mainland.

Meanwhile I've found out that although Amazon.com will sell my book, Barnes and Noble won't. To use the company's PubIt! service (to upload books to B&N), you must have a valid US bank account, credit card, tax ID and address. That's pretty comprehensive, then.

I am increasingly furstrated at how US-centric this online bookery business is - particularly at Amazon.com refusing to sell copies of my book to people logging in from the Middle East. It's something of a puzzle to me as I specifically opened up international rights to the book when I uploaded it - I had always assumed that Amazon won't sell to the region because publishers haven't granted rights, but in my case I have specifically allowed for international rights so there's no earthly reason, other than an arbitrary restriction imposed by Amazon, why the book shouldn't be available to Middle East readers.