Rounding out … shops must now give the correct change
Abu Dhabi has reversed its earlier decision on VAT that allowed retailers to round up prices for items that required change in low denomination coins.
The Department of Economic Development says it has made the decision after assurances from the Central Bank that there are enough of the coins in circulation for retailers to give change, and that it would mint more if needed.
Nine days ago the department announced that charges could be rounded up by 20 fils on lowcost items when the change required 10 and 5 fils coins.
Three days later, the Central Bank said its role was “to monitor cash use in the market and supply banks with the quantities of coins they require to address the needs of their various customers”.
The bank added: “At the moment, the amount of coins including small denomination in the market is sufficient.”
Under the original ruling, a
retailer selling an item for Dh1.05 including VAT would be able to charge customers Dh1.20.
Now paying for the same item will either require to buyer to have a 5 fils coin in their pocket or the seller to offer 20 fils in coins as correct change.
Khalifa Al Mansouri, the undersecretary at the department, said the earlier decision had been cancelled in response to calls from consumers to protect their rights.
The department said it was responding after the “Central Bank of the UAE confirmed that there are enough quantities of coin currency in the market, including the small denominations, and its readiness to remint any of the small denominations if the need arises”.
Mr Al Mansouri said that the initial decision to permit rounding up was based on a reading of the VAT law.
It stated that “if the value imposed on imports was calculated and contained fils fractions, then the party who is subject to the tax may round the amount to the closest fils based on the principles of arithmetic rounding”.
At the weekend, a workshop was held for tax inspectors on the method used by the Tax Authority to collect VAT by documenting the businesses, their revenues and the costs of their operations, and the importance of having them registered in the authority’s tax system.
The initial response to the fractions of VAT on smaller items was mixed. Some larger retailers such as Carrefour said they would round up or down to the nearest 25 fils for cash only. Card charges would be for the exact amount.
The Fathima chain said it would be rounding prices down and many smaller retailers, such as corner shops, said they would decide on a case by case basis.