Watchdogs ready to clamp down on tax overcharging

Retailers considering a price increase of more than the legal 5 per cent for VAT should think twice.

Eleven shop owners in Dubai were caught adding VAT a full month before the introduction of the new sales tax and were promptly prosecuted and fined by the city’s consumer protection watchdog.

Fines for overcharging the tax begin at Dh500 and can rise to Dh15,000 for repeat offenders.

Officials have said they will be monitoring price increases when VAT is introduced from 7am this morning.

In Dubai, shoppers can take their complaints to the Ahlan Dubai consumer hotline on 600 54 5555, or the Federal Consumer Protection Office on 600 522 225, which serves all emirates.

For those businesses who think they are wrongly being told to add VAT to services, the Federal Tax Authority has created a Tax Disputes Resolution Committee, with a promise it will try to rule within 20 days of an objection being lodged. But the businesses must charge and pay VAT until the committee rules on their complaint.

The Ministry of Finance has said that foreign businesses will be able reclaim VAT on expenses incurred when visiting.

What has not been clarified yet is whether ordinary visitors will be able to get back the VAT on goods they buy here.