As per the Executive Regulations Article 45 of VAT in UAE, there will be no tax on the means of public transportation. Therefore, the cost of using public transports for traveling and moving around the city does not change after the implementation of VAT in the country.
Those who are wondering whether private taxi services such as Uber and Careem will be under VAT gambit can also get relaxed. Since these services and others like them are used for passenger transport, they are also exempt from the VAT and no tax will be levied on their use.
The details of public transports that are exempt from VAT is mentioned in the Executive Regulations Article 45.
Public transportation exempt (and non-exempt) from VAT
The following means of transport, which are designed or used for the purpose of passenger transportation, are not taxable under VAT.:
- Ferry boats, abra, and other similar passenger transportation vehicles
- Motor vehicles, including taxis, railway train, monorail, bus, tram, the metro and other means of transport
- A helicopter, airplane or similar vehicle (except the ones owned and used for personal purpose)
This doesn’t apply to vehicles, including public transport, which is used for any of the following purposes:
- Pleasure or entertainment
- Enjoyment of catering services
All these services are not exempt from the VAT.
A UAE government official had earlier confirmed that when any vehicle, such as Uber, is used as a taxi for public transport, there will be no VAT on their services.