Getting Car Loan from the Bank As of now, no VAT is being charged on the car installments and interests associated with it. In fact, banks have also not changed their interest rates; this means that for the time being, banks are holding the VAT application. However, the processing fees of a bank loan varies from DH 500 - DH 1,500 which is somewhat close to 5% VAT charges. The Rise in the Yearly Cost The VAT charges are not applicable to inspection fees and car license registration fees; however, their prices have been increased a month before the tax became applicable. The fees for car license renewal has been increased from DH300 to DH350 (17% rise) and the inspection fee went from DH 140 to DH 170 (20% rise). Impact on Consumption Cost in Dubai Car Market Due to the 5% VAT, residents of Dubai are dealing with higher consumption cost on related aspects such as petrol, diesel, gas, etc. While this tax is not applicable to RTA parking fees, 5% charges are applicable for residential as well as commercial parking. However, if your residential rent includes parking charges then VAT won’t be applicable. This sudden rise has made people more conscious about acquiring a car and people who already possess one are concerned about the additional cost rise.
Rise in Cost of Service and Repairs VAT has also influenced the service and repair charges making them more expensive. From periodic service, oil change to simple car wash, 5% VAT is applicable to all services. In fact, it is also applicable in the purchase of spare parts. While it is yet to see how VAT is going to affect the yearly car sales, from the current scenario it is safe to conclude that we will witness a decline in the sales. Both online car market and offline car market have been affected by the application, but many companies are coming up with interesting discounts and offers to ensure that people still retain a good deal in the market.