While everyone’s attentions have been turned to how VAT will affect the price of high-cost items, the biggest hit the newly enforced tax may have on your wallet could be when purchasing a packet of chewing gum or bottle of water.
The Department of Economic Development on Thursday clarified the matter of small change when applying the 5 per cent charge on a low-cost item.
DED said shops in Abu Dhabi can round up the cost of products by up to 20 fils. For example, should a product cost Dh10.05 after VAT, the price can then be marked up to Dh10.25.
This means that products costing Dh1.05 after VAT will be rounded up to Dh1.25, which is an increase of 25 per cent from the pre-VAT cost.
It is unclear if the practice is also allowed in the rest of the emirates.
The directive came following complaints made by consumers to DED and queries regarding low denomination coins of 5 and 10 fils which have removed from circulation.
Ahmed Al Qubaisi, acting director of DED’s Commercial Protection Directorate, said the DED was keen to prevent any cases of exploitation in the application of VAT that infringe the rights of consumers.
DED will continue to carry out field inspections at sales outlets in Abu Dhabi to ensure correct application of the new charge.