Consumer affairs inspectors are scanning hundreds of products every day to catch out retailers trying to use VAT as an excuse to "manipulate" prices, the Minister of Economy has said.
Sultan Al Mansouri said 600 key items are under close scrutiny to ensure consumers are 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 spike in the cost of goods.
Inspectors said they have fined and even closed some stores in recent weeks for either charging more than 5 per cent VAT, or hiking prices to benefit themselves.
“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,” he told the chamber.
He said more than 13,000 inspections have been conducted in different outlets since VAT was implemented.
So far, the ministry has received a total of 1,918 complaints and 164 fines have been issued.
“Some entities took advantage [of VAT] in the beginning, but we have managed the situation.
“Some violations have been committed and those shops were identified and some were shut down.”
The Ministry has also been coordinating with local and federal organisations to tackle VAT teething problems.
“We conducted an urgent meeting 17 days after the VAT law was issued to go over a number of issues that arose,” said Mr Al Mansouri.
The first issue, which was slow circulation of fil coins leading to consumers receiving less change than they were owed for some transactions, has been solved with the Central Bank already, he said.
The Ministry has also been focusing on spreading VAT awareness, especially during the first month; 241 awareness campaigns have been carried out across media channels and social media platforms.
FNC member Ahmad Al Nuaimi argued that some sectors have witnessed irrational price increases.
He used examples from an Arabic news article published at the end of last year that said the price of some commodities had gone up by 42.5 per cent ahead of VAT. Another article said prices for construction materials have gone up by 17 per cent.
The member argued that this has affected the market.
“[Prices] have escalated massively and some merchants did not fully comprehend the situation, which lead to incredible price rises in a random manner,” said Mr Al Nuaimi.
“The main question is, 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 Mansouri also said that “things have stabilized 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 and announced that prices have not gone up “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 consumers and sellers, said she has received uncountable complaints on overpriced products from consumers in rural areas.
“There is no monitoring from the Ministry of Economy and they did not educate all members of the public ... 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 a 10-30 per cent increase. For instance, a 50 kilogram bag of flour used to cost Dh90 and now costs Dh110, according to Ms Al Mehrezi.
During the session, the FNC also passed a new draft law on arbitration, which allows commercial disputes to be solved through official arbitrators instead of going to court.