Retail expert warns of price rise
The price of goods in the UAE will increase and it will be customers picking up that extra cost when VAT is introduced across the GCC in January 2018.
That’s according to a senior figure at retail group Azadea, who was speaking at a conference on the introduction of the tax.
“Prices will clearly go up and those prices will go to the consumer,” said Elias Khoury, Group Financial Controller at the firm, which operates more than 50 franchise concepts, including GAP, Mango and Paul, across the Middle East and Africa.
He was speaking at the GCC VAT Forum, held this week by the International Quality and Production By Patrick Ryan Centre (IQPC) in Dubai’s Dhusit Thani Hotel. Khoury made his comments in response to a question about the impact the 5 per cent tax would have on retailers’ plans for expansion.
“We are not bearing this tax, our expansion plans are growing and will continue to do so unless we see a drop in customers,” he said.
He also said VAT will not have much impact on retailers: “It would be different with corporate or individual income tax.”
His remarks were in stark contrast to those of fellow panelist Justin Whitehouse, Deloitte Middle East Indirect Tax Leader, who addressed the crowd only moments before.
“It’s going to be quite difficult to put prices up,” he said. “People are going to be very suspicious of changes.
“The starting point for everyone is that all prices are going to be inclusive of VAT.”
While the UAE is pushing ahead with plans for VAT, other GCC nations are biding their time. “Qatar and Kuwait are not desperate for the money and may defer until later,” said Whitehouse.
“But all the countries really need to do is put the law in place and the penalties, it’s simple, that’s why they like VAT.
“They need the money and they want the money so why would they wait?”