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Oct 24, 2023

Grocery store prices displayed without VAT: Is it legal

Is VAT being added to your bill on check out? Here is what the UAE tax rules

Is VAT being added to your bill on check out? Here is what the UAE tax rules state

Dubai: Have you ever noticed a Value Added Tax (VAT) of five per cent being added to your grocery bill every time you check out? A Gulf News reader wrote in, sharing his experience and wondering whether the practice was legal.

He asked: "I wanted to check if it is legal to put prices of items on display at racks excluding VAT and add it up while checking out at supermarkets. I have noticed most of my neighbourhood supermarkets doing this."

Gulf News raised this query with the Federal Tax Authority (FTA) - which is the government entity responsible for administering, collecting and enforcing federal taxes - to find out what the rules are regarding display of prices and whether VAT can be added at the end of the customer's purchase.

Speaking to Gulf News, FTA Director General Khalid Ali Al Bustani stated that displaying product prices without including the amount of tax charged is considered a violation of the UAE's tax laws.

"The practice misleads consumers who will end up paying more than the amount they expected when deciding to make the purchase. The FTA urges businesses registered for VAT to fully comply with tax laws to avoid administrative penalties," he said.

He noted that the failure to display tax-inclusive prices leads to the imposition of a Dh5,000 penalty for VAT.

"The FTA is always keen to enhance taxpayers’ awareness through a plethora of unique initiatives that aim to educate taxpayers about their rights and obligations. Such initiatives aim to protect them from any attempts of exploitation in the name of the tax system. The FTA is strengthening its efforts to support businesses to comply and adhere to the tax regulations and procedures. Through its strategic relations with the business sectors, FTA's awareness campaigns and workshops enable businesses to comply with the tax legislation," he said.

Al Bustani added that the FTA works closely with Departments of Economic Development and relevant authorities to educate merchants and taxpayers about tax laws and procedures in local markets.

"The FTA urges taxpayers to pay close attention to the tax invoice of their purchases as it should contain accurate tax values, comply with the legal standards, and have a valid tax registration number. Tax invoices guarantee all parties’ rights, protect consumers’ rights, and combat tax evasion," Al Bustani said.

If you find an outlet not following the FTA guidelines and wish to register a complaint, you can call the FTA or use their website to register the complaint and document your experience, according to Al Bustani.

1. Call the FTA call centre on 600599994.2. Select your preferred language from Arabic, English, Hindi and Urdu.3. Select the option for complaints and suggestions (4).4. You will then be directed to a customer service agent, who will note down your complaint and give you a reference number.

1. Visit: https://tax.gov.ae/en/contact.us.aspx2.Fill out the following details:• Name• Email• Phone Number• Subject – here, select ‘complaints’ from the dropdown menu.• Service – here, you can select ‘customer service’ from the dropdown menu.

3. Under the comments section, enter the details of your experience.4. Fill in the verification Captcha code.5. Click ‘Submit’

You will receive a response from the FTA on your complaint within two working days.

"The competent departments will attend to these cases. The FTA pays great attention to all observations and complaints it receives from taxpayers and all segments of the community," Al Bustani said.