Low-cost items hit by ‘rounding up’ of prices under VAT rules
While everyone’s attention was understandably turned to how the introduction of VAT would affect the price of high-cost items, the biggest hit the newly enforced tax may have on your wallet could be when buying a packet of chewing gum or a bottle of water.
Abu Dhabi’s Department of Economic Development yesterday clarified the matter of small change when applying the 5 per cent charge to a lowcost item.
The department said shops in the capital can round up the cost of products by up to 20 fils. For example, should a product cost Dh10.05 after VAT, the price can be marked up to Dh10.25.
This means that products costing Dh1.05 after VAT will be rounded up to Dh1.25, which is an increase of 25 per cent from the pre-VAT cost.
The notice came after complaints to the department by consumers and queries regarding low denomination coins of 5 and 10 fils, which are no longer in circulation.
Ahmed Al Qubaisi, acting director of the department’s Commercial Protection Directorate, said the department received five complaints on the first working day of the year about the dishonest application of VAT, including suspected abuse by traders and excessive price increases.
The department responded by transferring the complaints – with accompanying evidence – to field inspection teams for investigation.
Mr Al Qubaisi said the department would continue to carry out field inspections at sales outlets in Abu Dhabi to ensure correct application of the new charge and asked consumers to report any suspicions they may have by contacting its call centre on 800555.
Officials previously said they would be monitoring price increases after the tax took effect on January 1.
Fines for overcharged VAT begin at Dh500 and can rise to Dh15,000 for repeat offences.
In Dubai, 11 shop owners were caught adding VAT to prices a full month before the introduction of the sales tax, officials said.
Those owners were promptly prosecuted and fined by the city’s consumer protection watchdog.