As we were busy welcoming in January 1st 2018, businesses were, overnight, increasing their price points on everything (food, drink, clothes, services) by 5% to fall into compliance with the new VAT regulations. This increase excludes any new year increases which were also applied. The UAE is now 5%+ more expensive to live and work in.
So, did salaries increase in line with these cost of living uplifts? The simple answer for many small and medium businesses is no, they just cannot afford to keep up with the increases in cost of living. The VAT Companies are now charging on invoices raised and are paid back to the Government quarterly, making cash flow management a top priority, but Companies are not 5% richer, a point missed potentially by their workforce.