UAE consumers to pay 25% more for some products

The introduction of value added tax on January 1 could mean UAE consumers pay 25 per cent more for some cheaper products.

The Department of Economic Development – Abu Dhabi announced that shops have 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 means that an item costing Dhs1 before the 5 per cent tax rate was introduced, like water bottles and chewing gum, will now cost Dhs1.25 instead of Dhs1.05 when purchased on its own as few Dhs0.05 or Dhs0.10 coins are available.

Similarly the fils total on any bill can be rounded up to .25, .50, or .75.

The new directive followed complaints from consumers who believed they were being overcharged.

The DED said it would carry out field inspections to ensure shops and businesses are implementing VAT correctly.

Earlier this week, DED chairman Saif Mohammed Al Hajiri said the tax would have a minimal impact on the country’s business sector, and generate a number of benefits for the economy.

“The application of VAT … will reflect positively on the country’s developmental drive as it ideally goes in harmony with the government’s vision to ensure a robust, sustainable and diversified economy to ultimately wean the country off oil in the future,” he said, according to state news agency WAM.

Read: VAT will help wean UAE off oil, says official

VAT is being applied to most products and services including food, beverages, fuel and utility bills.

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