Consumers in the VAT Age Feel Empowered
VAT in UAE was implemented on 1st January, with an aim to have a positive effect on the country’s development since it ideally goes in harmony with the government's vision to ensure a robust, sustainable and diversified economy to ultimately wean the country off oil in the future. This has also marked a new beginning in the participation of general public for both the residents as well as for the Emirates for the purpose of shouldering the responsibility of public expenditure.
Its introduction has empowered the consumers and it is thus important for them to have an understanding of their rights and responsibilities in the payment and collection of VAT.
General Consumer Queries That Continue to Arise Post VAT
1. Are prices displayed at a supermarket inclusive of VAT?
The executive regulations pertaining to tax exclusive prices state that in case of a taxable supply, the published price is to inclusive of VAT. And there are two exceptions to it which are applicable in case of export and supply to another. The VAT registrant is this supposed to specifically state that the price that has been displayed is exclusive of VAT.
2.What are the options where a supermarket is clearly only adding VAT on prices at the till?
The consumers are entitled to register the complaint with the Consumer Protection Division at the Department of Economic Development in case a supermarket adjusts prices or accounts for VAT at the till. The Federal Law permits to issue an administrative penalty in case of any failure by a taxable entity to display the price inclusive of VAT. In case such omission happens, the shoppers can bring their complaints to the attention of the authorities and in this way the authorities assist in ensuring proper implementation of law as any failure to comply renders the business subject to fine.
3. A restaurant has increased their prices by 8 per cent since the VAT implementation. Are they allowed to do this?
The consumers can notify the Consumer Protection Division in case the business owners resort to price manipulation so that appropriate action can be taken.
4. What recourse do shoppers have where they feel they are am being incorrectly charged the 5 per cent attributable to VAT?
The shoppers should inspect the tax invoice that has been issued by the business and also verify the TRN that appears thereon in case the shoppers believe that they are being incorrectly or unreasonably charged. However in case the business is not registered for VAT or if a TRN does not appear, they cannot charge VAT and the consumers should notify the authorities accordingly.
5.Are tips and gratuity subject to VAT?
In case where gratuity is included in the bill for the services rendered, then gratuity would be subject to VAT and in case the consumers provide a tip, then that amount would not be considered as subject to VAT.
How can Customers Prevent Themselves from Being Overcharged
The consumers can do the following to prevent themselves from being overcharged:
● Check for the retailer’s TRN and the VAT amount on the invoice since it is compulsory for the registered retailers to provide their TRN and they are also required to mention the VAT amount separately on the tax invoice. The consumers are not allowed to pay VAT in case there is no TRN or if the VAT amount is not mentioned properly.
● The retailers are also not allowed to increase the price due to VAT
● Also, the consumers should read and understand the law in order to differentiate between standard, zero rated and exempt supply.
Higher Committee of Consumer Protection
The Higher Committee of Consumer Protection is thus ensuring continued coordination between all the state departments concerned with the VAT in order to corroborate the consumer’s confidence in the market stability and also sound application of tax and to prevent any unjustifiable price hikes.
The consumers in order to save themselves from exploitation must plan their expenses every month and should also try to stick with the plan. The eligible consumers should look for the credit card options that provide a good percentage of cash back on the card. This would however not help them to recover the VAT expenses totally but they would be able to lower their monthly expense to some extent.