Is It Possible To Sell A Car With A Lifetime Tax?

A new driver's handbook states that the price you pay for a new or used automobile depends on whether you purchase from an agency, a dealer, or an individual.

A marketplace for home services stated that "you will have to pay 5% VAT on the car's value if you are purchasing a brand-new car from the agency or a pre-owned car registered under the agency or dealer."

Experts claim that it is still unclear how the tax will be applied to that sale because it can be applied to the actual invoiced amount, which may be a discounted amount, or to the suggested car selling price.

"However, junk car buyers that are still registered under their original owners but are being sold through dealers will be required to pay 5% of the profit that the car dealers receive. Nonetheless, purchasing directly from another customer is the best option.

There is no VAT if it is a consumer-to-consumer sale so we may see traders pretending to be consumers and selling through classified ads.

Because of this, it is preferable to purchase directly from the original owner or via an online vehicle sales platform that facilitates direct owner-to-owner transactions.

Federal National Council (FNC), advocated last month for a ceiling to be imposed on the escalating cost of purchasing an automobile before the implementation of VAT. According to an undisclosed report, the UAE has the highest car pricing in the Arabian Gulf.

During an FNC session, "There is a fear of inflation because of the value-added tax and the talk of the UAE having the highest prices in the Gulf today."

Further effects of VAT on drivers in the UAE include the following:

Auto Loans

The guidance states that since most banks have not changed their rates on motor loans, there is no VAT applied to auto loans or the associated interest rates.

This implies that, for the time being, the banks will cover any application of VAT. However, 5% VAT is applied to bank loan processing fees, which are typically between Dh500 and Dh1,500.

Maintenance and Fixes

Because VAT is applied to services like oil changes and auto repair services like buying spare components, car maintenance has also grown more expensive. VAT is also levied when washing cars at the petrol station.

Conclusion

In summary, selling a car with a lifetime tax is feasible, but it requires a few more steps and considerations. CarPoint.ae is committed to smoothly assisting sellers through the process because it recognises the intricacies of these kinds of transactions.

Sellers can secure a smooth transition for all parties involved, ensure compliance with tax rules, and manage the ownership transfer with confidence thanks to CarPoint's experience. CarPoint.ae is available to help you every step of the way, whether you're selling a car with a lifetime tax or looking into other possibilities.