Small shops and shoppers still full of questions
started We to haven’t pass on the extra money onto customers but some have. This will take time to be sorted out.” A grocery shop manager
ABU DHABI — On the first day of the UAE’s new value-added tax (VAT), small shops like salons, restaurants, grocery stores and others were a confused lot. And some are enjoying a free-hand too.
With the announcement of five per cent VAT, sellers in the country had been asked to register with the Federal Tax Authority. The registration was mandatory for any firm with an annual turnover of Dh375,000 or more, and optional for those ranking between Dh187,500 and Dh375,000. Any shop with less than Dh187,500 as turnover needn’t register under this law.
Confusion and questions of accountability arise on few accounts.
Figure this: If a salon isn’t falling under the category of Dh375,000 it needn’t register or implement VAT. However, the products being purchased to run daily affairs — shaving cream, talcum powder and others are all falling under the tax bracket. So when a hairdresser purchases these from any hypermarket paying VAT, he will naturally pass on the extra amount onto customers.
“I am confused as we can’t simply hike rates on our own. I hope soon there will be some regulation or consideration being shown to our case. Now, we have to pay extra and get nothing in return. I am sure the tax authorities will look into this aspect. People like me are now groping in the dark with this change. We are literally blind. As a safe bet, I have done an optional registration,” Sajeev Sadasivan, who runs a salon in Abu Dhabi, said.
Another issue is manual billing without any invoices or receipts. None of the shops visited by Khaleej Times, where manual billing is the order, have specified about which VAT category they fall under.
“We don’t know about this. We don’t come under the ambit of VAT but have done optional registration. We haven’t started to pass on the extra money onto customers but some have. This will take time to be sorted out. Such process should have been better done in phases. Maybe soon we will have billing system to have more transparency,” a grocery shop manager said.
Then there are small vegetable shops, spices stores or restaurants where there is no accountability as mostly the final bill is something the shopkeeper decides on the counter with a calculation on the calculator or a scribble with pen to reach an amount.
Worse is the case where a few tea stalls have nicely raised rates from Dh1 to Dh1.5. When asked about the hike, the staff said it is due to VAT. While in one way small shops are getting affected due to new tax rule on the other hand, some of them are taking customers for a ride. All hopes are now on tax authority to step in and take necessary action.