Post-VAT, small change is a big issue: FNC hears
Salem Abdulla Al Shamsi speaks during the FNC session. - KT photo By Ryan Lim
Abu Dhabi - Consumers are not being offered their full change, and this has become an issue
By Jasmine Al Kuttab
Published: Tue 30 Jan 2018, 9:02 PM
Last updated: Wed 31 Jan 2018, 11:28 AM
Shoppers in the UAE are claiming they are not receiving their full change and refund when purchasing products as stores claim they no longer hold 1, 5, and 10 fils coins, the Federal National Council (FNC) was told.
During the FNC session in Abu Dhabi on Tuesday, chaired by Speaker Dr Amal Abdullah Al Qubaisi members raised the issue, stating that consumers are not receiving their full change, which has become a great concern since the Value-Added Tax (VAT) was implemented.
"Consumers are not being offered their full change, and this has become more of an issue since the introduction of the VAT," argued FNC member Salem Al Shamsi.
He said there is a shortage of 1, 5 and 10 fils coins and banks are claiming they no longer supply them. "We need to cover the shortage of these coins."
|Draft law on lease financing passed |
The Federal Na-tional Council (FNC) passed a draft law that allows lease financing, during its session on Tuesday. Lease financing already exists in at least one bank, which is based in the Capital, although the practice was not regulated by law.
The legislation, which awaits approval by the President to become law, stipulates that lease financing providers must obtain licences from the Central Bank.
The draft law states that entities which practise lease financing without an official licence will be fined anywhere from Dh200,000 to a whop-ping Dh10 million, and/or an unspecified jail term.
Non-oil exports increase
Also during the session, Mubarak Rashid Al Mansouri, UAE Central Bank governor, discussed Central Bank Policy, highlighting that pegging UAE Dirham to the US Dollar has significantly boosted the country's economy.
He said it has led to a rise in the non-oil exports by four per cent in 2016, despite the increase in the dirham's exchange rate, compared to the main trade partners that do not deal in dollars, by 0.3 per cent.
According to the central bank estimates, non-oil economy in 2017 was expected to grow by three per cent from the year before.
Moreover, the banking sector contributed to the growth of the non-oil economy growth in 2017.
Al Mansouri said non-oil economy made up a whop-ping total of 81 per cent of the country's total economy.
He pointed out that local and international media channels have even covered the issue recently, by asking banks whether they hold the coins, but the banks said they no longer hold it.
"There is a lack of awareness with regards to the small fractions of dirham, and many banks don't want to deal with these fractions," added Al Shamsi. "The central bank should make the banks deal with this issue, because the market needs it."
Obaid bin Humaid Al Tayer, Minister of State for Financial Affairs, said shops do not often request banks to supply them with the small coins.
"Since the introduction of the VAT, the lack of these coins has lead to consumers demanding their rights from storekeepers."
Al Tayer pointed out that the central bank has millions of these coins available, which are distributed upon request to banks and money exchange centres.
He added that supply of the fils coins until January 25 reached 3.4 million for 1 fil coins, 42.4 million for 5 fils coins, 48.7 million for 10 fils, 262 million for 25 fils, and 363.8 million for the 50 Fils coin. Al Tayer noted that the ministry follows up on the local currency circulation daily.
"We will study the need for the small denomination coins and if there is a need for supply, they will be produced by the central bank."
The minister also noted that complaints related to the VAT have significantly dropped, as its implementation completed one month.