Inspectors monitor basket of 600 items to check VAT fraud
More than 13,000 inspections had been conducted since VAT was implemented. The ministry has received 1,918 complaints and 164 fines have been issued SULTAN AL MANSOORI Minister of Economy
Consumer affairs inspectors are scanning hundreds of products a day to catch retailers using VAT as an excuse to “manipulate” prices, the Minister of Economy has said.
Sultan Al Mansoori said 600 key items were under scrutiny to ensure consumers were not hit with “unnatural” price rises.
The minister was speaking to Federal National Council members in Abu Dhabi.
For a third time in recent weeks, members raised concerns from constituents about what they said was a sharp rise in the cost of goods.
Inspectors said they had fined retailers and even closed shops for either charging more than 5 per cent VAT, or raising prices for their own benefit.
“We are reviewing price lists of 600 products from 400 outlets on a weekly basis to monitor changes and see if there has been any manipulation,” Mr Al Mansoori said.
He said more than 13,000 inspections had been conducted since VAT was implemented. The ministry has received 1,918 complaints and 164 fines have been issued.
“Some entities took advantage of it in the beginning but we have managed the situation,” Mr Al Mansoori said. “Some violations have been committed and those shops were identified and some were shut down.”
The ministry has also been co-ordinating with local and federal organisations to tackle teething problems in VAT.
“We conducted an urgent meeting 17 days after the VAT law was issued to go over a number of issues that arose,” Mr Al Mansoori said.
The first issue, which was slow circulation of small-denomination coins that meant consumers received less change than they were owed, has been solved by the Central Bank.
The ministry is also focusing on spreading VAT awareness, especially during the first month, with 241 campaigns.
FNC member Ahmad Al Nuaimi argued that there had been “irrational” price rises in some sectors.
The member for RAK used examples from a newspaper late last year that reported the price of some commodities had gone up by 42.5 per cent before VAT. Another article said prices for building materials had gone up by 17 per cent.
“Prices have escalated massively and some merchants did not fully comprehend the situation, which led to incredible price rises in a random manner,” Mr Al Nuaimi said.
“Do we have an open market that regulates itself based on supply and demand or is the market controlled? What is the role of the government in controlling prices?”
Mr Al Mansoori said that “things have stabilised in February and they will be more stable in the coming months”.
Mr Al Nuaimi said if the news was incorrect, then the ministry should have denied it publicly, “especially since VAT is all people are talking about this year”.
Raya Al Mehrezi, deputy head of a private consumer protection association whose role is to spread awareness among traders and shoppers, said she had received many complaints of overpriced products from rural areas.
“There is no monitoring from the Ministry of Economy and they did not educate all members of the public,” Ms Al Mehrezi said. “It is not enough to educate those living in the cities.
“Also, in Dubai the prices are being raised on a daily basis and they don’t even have proper VAT receipts.”
Some prices are reflecting increases of up to 30 per cent. A 50 kilogram bag of flour that used to cost Dh90 now costs Dh110, Ms Al Mehrezi said.
Yesterday, the FNC passed a draft law that allows commercial disputes to be solved by arbiters instead of court.