Consumer concerns about the impact of value added tax (VAT) in the UAE are reducing


Consumer queries about the effect of value added tax (VAT) in the UAE are decreasing, as per Sultan bin Saeed Al Mansouri, the country’s Minister of Economy.

At a meeting of the Higher Committee of Consumer Protection, the minister disclosed that the number of calls from consumers have reduced from 3,261 on the introduction day of VAT (January 1) to 493 two weeks later.

He mentioned in comments reported by state news agency WAM on Saturday, “The committee received growing calls from the consumers during the first days of the VAT application. People had some concerns, but their worries have ebbed with the passage of time.”

Director general of the Federal Tax Authority (FTA), Khalid Ali Al Bustani, mentioned that the complaints obtained by the committee address three main issues – price increase, tax registration numbers and erroneous calculation of VAT on some items.

Al Bustani mentioned, “Traders and departments against whom the complaints were filed have been notified and were given a grace period to rectify their strategies as per the tax rules and condition.”

Undersecretary for Economic Affairs in the Ministry of Economy, Mohammed Ahmed bin Abdul Aziz Al Shehhi stated, “The committee is in constant follow-up of the market to prevent any violations and in case of any non-abidance, all legal measures have been taken against the violators.”

The introduction of VAT on January 1 arrives as Gulf countries, including the UAE, are looking to decrease their dependence on revenues from oil that are reducing in value and create a greater proportion of revenue internally in a way to maintain present levels of economic expansion.

Representatives of the six member states of the Gulf Cooperation Council (GCC) signed the VAT Framework Treaty early previous year, confirming the launch of a formal VAT system in all the member states although only the UAE and Saudi Arabia introduced this year.

The rate is at first set at 5 percent, and similar to most VAT systems there are a range of exemptions. Certain foods and services, including healthcare and education, will be exempt. As per IMF calcultes, even this modest rate is predicted to realise VAT revenues of up to 1.6 percent of GDP in the GCC countries.

 

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