VAT in UAE: Retailers warned against unjustified price hike

dubai - Consumers have been asked to report any violations and complaints

The Department of Economic Development (DED) in Abu Dhabi has warned it will monitor any price hikes after the UAE implemented value-added tax (VAT) from January 1 and asked consumers to report any violations and complaints.

The Department collected price details of products in 2017 from retailers and it will verify in the first quarter of 2018 to ensure that the price hikes are not beyond the permitted level in line with the implementation of five per cent VAT.

Saif Mohammed Al Hajeri, chairman, DED, said the department has put in place a plan across the emirate to monitor prices, follow up on sale points and open channels of communication with consumers to detect any violations or complaints regarding the misuse or exploitation of the tax to achieve exaggerated increase in prices.

He called upon all private sector companies and institutions that are registered with the DED to register in the tax system of the Federal Tax Authority as soon as possible to make it easier for the Authority to collect the tax smoothly.

Khalifa Salem Al Mansouri, undersecretary at DED, said the department would take strict action in case any violations take place or VAT is used to exploit consumers' rights. The DED will intensify inspection campaigns in markets and sale points to detect any violations and exaggerated increase in prices that might affect the consumers' purchasing power, he added.

Moreover, he advised consumers to contact the DED via the government contact centre on 800555 in case they detect any violations or exaggerated increase in prices by the business sector in the fight against those who try to exploit the new tax.

Al Mansouri said the DED's inspection team has monitored commodities' prices over the last months of 2017 across sale points and built a database that helps inspectors detect violations and price increases after the implementation of the tax.

He also pointed out that the plan consists of implementing many inspection campaigns during the first quarter of this year through which the inspectors will work on comparing the prices of the commodities with their prices last year to ensure that the increase is five per cent.

Al Hajeri noted that the business sector and consumers' concerns regarding the implications of implementing VAT are exaggerated since the impact is going to be relative and very limited.

"The impact will not pose any risks that might lead to confusion in price increase in general or major additional financial burdens on the part of the private sector companies and the consumers," he said.

The UAE has levied VAT at five per cent following thorough research studies conducted by competent bodies at ministries and federal entities.

"These studies confirmed that there would be no major increase in the cost of living in the country."

Economists have projected that inflation in the UAE will marginally inch up due to VAT as the tax rate is one of the lowest in the world..

- waheedabbas@khaleejtimes.com