Footfalls drop but retailers cool about VAT in UAE

Abu Dhabi - The staff has been told to update customers about the new tax rules and clarify doubts if any.

Big and small retailers in the Capital were mostly well-prepared as they welcomed customers on the first day of the new tax era. From Monday, five-per cent value-added tax (VAT) has been implemented on goods and services. It is a consumption tax placed on a product whenever value is added at a stage of production and at the point of retail sale.
Mangers of retail groups, hypermarkets, restaurants and others said they had trained their staff to deal with confused customers. The staff has been told to update customers about the new tax rules and clarify doubts if any.
"It has been largely fine. Customers look at the bill and there is an extra stare but they know it's not something we have done. It's the country's rule and for good too," general manager of a big hypermarket on the Muroor Road said.
Contrary to past few days of massive crowd of shoppers at hypermarkets stockpiling products to beat the VAT bite, Monday morning to evening hours had lesser crowd.
In a bid to woo consumers, some electronics and appliances shops offered one more day of pre-VAT prices on Monday.
Then there were others including retailers, restaurants and jewellery shops, which came up with VAT-inclusive rates and other innovative ideas.
A big retail brand is in fact paying back VAT through loyalty programmes. Some restaurants are including additional VAT in their products and giving a final bill whereas jewellers are paying the extra amount of the customers this month.
These kinds of doles and more can be expected in coming days as retailers go an extra mile to allay apprehension of customers about VAT burning a hole in their pockets.
While retailers were ready with new offers, a few shops were shut in malls across the Capital. These shops were said to be shut from late on December 31 to update software as per new pricing and tax regulation.
When asked about a shut shop, the manager said the brand has never desired to remain closed on the first day of a year but is doing updates as per the new regulation.
Most of the retailers said shoppers have made heavy purchases in past few weeks and they expect a lull period for the first half of January. Retailers opined such taxation will be good for residents.
Hashantha Vimal Surendra, manager of Style Studio fashion store in Mushrif Mall, said the footfall on the first day of the year - with a new rule in place - wasn't an apt way to judge how residents reacted to VAT or their shopping pattern.
"This is okay. The UAE has imposed a five per cent VAT and this is a good one. In my home country of Sri Lanka, it is 15 per cent. Other countries it's even more," said Surendra, who is based in the Capital for more than 12 years.
"The UAE government will give more back to the residents. There will be more services and better facilities on offer. The business will be slow for a few days or a month but will return to normalcy. People will return to shops soon. VAT isn't a big issue."
ashwani@khaleejtimes.com