As you are aware, value-added tax (VAT) implemented in the UAE on January 1. This
Towards the end of the last year, the Federal Tax Authority put out a pretty comprehensive document that detailed the exclusion of certain products and services from
But for everything else, you have to pay the five
But on the insurance side, it's actually a little more complicated than you might think. Yes, you pay VAT on top of the cost of your premium, but other things are going on, too.
So, let's assume
Now, that's not too much of a bitter pill to swallow. But what's interesting to us is the level of cover you're getting in this post-VAT world.
Say you are buying a new car, and, to keep things simple, its showroom price is Dh100,000. That means you will pay Dh100,000 for the car, plus Dh5,000 in
But what happens when you get an insurance policy for that car? Will the policy value the car at Dh100,000 (the showroom price), or will it value the car at Dh105,000 (the showroom price plus VAT)?
To be honest, it's not clear right now. But one thing's for sure - if your policy does value the car at its showroom price, and disregards the VAT, you're out of pocket for that five
Now, it's likely you'll be able to get around this by simply taking out an insurance policy that values the car at Dh105,000. Some insurers may not go for it, but others will, and you'll simply have to pay a little bit extra for that additional
With travel and home insurance, things should be a little easier. When it comes to travel insurance, you're buying a pretty standard, one-size-fits-all policy, with very little information required to be given a quote. Sure, there may be price variations based on your age, or where you're going, but VAT has no bearing on that, so you can expect to simply pay five
Home insurance, meanwhile, asks you to declare the value of your belongings. So, say you've got a TV at home that cost Dh2,100 after VAT, you can simply declare you have a TV worth Dh2,100 at home. For some people, this will mean paying for a more comprehensive policy, but for the majority, we reckon VAT won't have much of an effect on how home insurance is issued. Again, you can mostly expect to just pay five
And when it comes to health insurance, you probably won't see much change at all. Quite apart from the fact that most people in the UAE have health insurance provided by their employers, key healthcare services will be either exempt from VAT or zero-rated. Where VAT does apply, the small increases will likely be accommodated by the limits provided by your health insurance policy anyway, so there's nothing to worry about there.
VAT is a big and positive step for the UAE. And it should have minimal effects on how your insurance is bought and delivered. However, because of the slight changes involved, it's always best to compare the different options available in the market to ensure you're getting the right coverage.