UAE central bank says enough coins in circulation amid overcharging concerns

The UAE’s Central Bank has said the country has sufficient small coins in circulation following concerns consumers were being overcharged for some products after the introduction of value added tax.

Last week, the Department of Economic Development – Abu Dhabi announced that shops had been given permission to round up the cost of items by up to Dhs0.20 if payment is made in cash due to a lack of coins in lower denominations than Dhs0.25 in circulation.

This meant that an item costing Dhs1 before the 5 per cent tax rate was introduced, like water bottles and chewing gum, would now cost Dhs1.25 instead of Dhs1.05 when purchased on its own as few Dhs0.05 or Dhs0.10 coins are available.

The National quoted the central bank as saying it was fulfilling its remit to supply banks with the quantities of coins they require to address customer needs.

“At the moment, the amount of coins including small denomination in the market is sufficient,” the bank said, according to the publication.

Various supermarket chains in the UAE said they were either rounding down or rounding up prices following the introduction of VAT on January 1.

Spinneys said its policy was to round down, while Carrefour and Zoom said they will round bills to the nearest 25 fils, up or down.

Read: UAE consumers to pay 25% more for some products

The coin policy is forcing many lower paid workers, who would traditionally purchase single dirham items, to buy in bulk.

The 5 per cent VAT is applied to most products and services including food and beverage items, utility bills and fuel.

Read: Revealed: Goods and services subject to VAT in the UAE

It was unclear if the change in policy announced by the Department of Economic Development applied just to Abu Dhabi or the whole of the UAE.