Retailers in Dubai who begin charging value-added tax (VAT) on purchases before the tax is introduced, or who charge more than the 5 percent allowed, will face a series of escalating fines, a Dubai government official told Zawya.
Mohammed Ali Rashid Lootah, chief executive of Dubai Economy's Commercial Compliance and Consumer Protection (CCCP) unit, said that his organisation's inspectors had already begun monitoring retailers' prices prior to the publication of the VAT executive regulations in the United Arab Emirates late last month. Inspectors work from 8am to 4am and are already monitoring prices ahead of the introduction of VAT, which comes into force in the country at 7am on January 1, 2018, he added.
"So we will concentrate in the next few days on ensuring that there is no retailer that starts charging VAT before 1 January (and) there (are) no retailers that are overcharging," Lootah told Zawya in a telephone interview on Sunday.
He said that the CCCP's role was not to ensure VAT is implemented, as that is the responsibility of the newly-established Federal Tax Authority.
"Our job here is to ensure that there is no manipulation in the market under the excuse of implementing the VAT. So in case a trader or a merchant increases 7 percent or 10 percent. Or in case he implemented the increase before the date," he said.
Lootah added that any retailer caught attempting to charge VAT before January 1, or charging more than the 5 percent required under the VAT regulations, faces an initial fine of 2,000 UAE dirhams ($544.50), which will double with every repeat offence.
"There are two types of increase," Lootah said. "Some products depend on international markets - for example gold depends on the price of gold. So we're not talking about the regular increase of products or raw materials, we're talking of someone who took advantage to spike the prices under the excuse of the VAT implementation,” Lootah said.
Consumer power
“Those incidents, we would really like consumers to report them so we can really investigate the case and try to protect consumer rights," he added.
He urged consumers who felt that they had been unfairly charged by a retailer to lodge a case with Dubai Economy via its hotline, 600 545555. It will then investigate claims.
"No matter how many inspectors we have, we have more than two million consumers in Dubai. Their cooperation will definitely help us to protect their rights," Lootah said.
He said that retailers who were unsure of what is, and isn't, acceptable in terms of price adjustments, should also get in touch and it will provide the necessary guidance.
"But if someone just keeps quiet and tries to manipulate then this shows they have an intention of taking advantage or just pure ignorance that they don't really care about being in line with the laws and regulations, and both cases are not good for consumers."
Saeda Al Qayoumi, a consultant working for the Federal Tax Authority, said in a press conference held in Dubai last month that businesses who charge VAT ahead of January 1 will be subject to penalties imposed by the authority.
“We know that some businesses have already been charging VAT and I will give you an example, I myself was charged VAT… and businesses should not be doing that, that is tax evasion,” Al Qayoumi said.
Article 26 of the UAE’s Tax Procedures law states tax evasion penalties include a prison sentence and a fine of no more than five times the amount of the evaded tax, or either of the two.
For Zawya's Special Coverage on the introduction of VAT, click here.
(Reporting by Michael Fahy; Additional reporting by Yasmine Saleh; Editing by Shane McGinley).
© ZAWYA 2017
Mohammed Ali Rashid Lootah, chief executive of Dubai Economy's Commercial Compliance and Consumer Protection (CCCP) unit, said that his organisation's inspectors had already begun monitoring retailers' prices prior to the publication of the VAT executive regulations in the United Arab Emirates late last month. Inspectors work from 8am to 4am and are already monitoring prices ahead of the introduction of VAT, which comes into force in the country at 7am on January 1, 2018, he added.
"So we will concentrate in the next few days on ensuring that there is no retailer that starts charging VAT before 1 January (and) there (are) no retailers that are overcharging," Lootah told Zawya in a telephone interview on Sunday.
He said that the CCCP's role was not to ensure VAT is implemented, as that is the responsibility of the newly-established Federal Tax Authority.
"Our job here is to ensure that there is no manipulation in the market under the excuse of implementing the VAT. So in case a trader or a merchant increases 7 percent or 10 percent. Or in case he implemented the increase before the date," he said.
Lootah added that any retailer caught attempting to charge VAT before January 1, or charging more than the 5 percent required under the VAT regulations, faces an initial fine of 2,000 UAE dirhams ($544.50), which will double with every repeat offence.
"There are two types of increase," Lootah said. "Some products depend on international markets - for example gold depends on the price of gold. So we're not talking about the regular increase of products or raw materials, we're talking of someone who took advantage to spike the prices under the excuse of the VAT implementation,” Lootah said.
Consumer power
“Those incidents, we would really like consumers to report them so we can really investigate the case and try to protect consumer rights," he added.
He urged consumers who felt that they had been unfairly charged by a retailer to lodge a case with Dubai Economy via its hotline, 600 545555. It will then investigate claims.
"No matter how many inspectors we have, we have more than two million consumers in Dubai. Their cooperation will definitely help us to protect their rights," Lootah said.
He said that retailers who were unsure of what is, and isn't, acceptable in terms of price adjustments, should also get in touch and it will provide the necessary guidance.
"But if someone just keeps quiet and tries to manipulate then this shows they have an intention of taking advantage or just pure ignorance that they don't really care about being in line with the laws and regulations, and both cases are not good for consumers."
Saeda Al Qayoumi, a consultant working for the Federal Tax Authority, said in a press conference held in Dubai last month that businesses who charge VAT ahead of January 1 will be subject to penalties imposed by the authority.
“We know that some businesses have already been charging VAT and I will give you an example, I myself was charged VAT… and businesses should not be doing that, that is tax evasion,” Al Qayoumi said.
Article 26 of the UAE’s Tax Procedures law states tax evasion penalties include a prison sentence and a fine of no more than five times the amount of the evaded tax, or either of the two.
For Zawya's Special Coverage on the introduction of VAT, click here.
(Reporting by Michael Fahy; Additional reporting by Yasmine Saleh; Editing by Shane McGinley).
© ZAWYA 2017
