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Shoppers at Deira City Center as VAT comes into effect on 1st January. Image Credit: Virendra Saklani/Gulf News

Abu Dhabi: Retailers do not expect an impact on their business due to introduction of 5 per cent value added tax on most goods starting from Monday.

VAT is levied on a number of items including food and beverages, electronic goods, jewellery, hotels, petrol, among others.

“The tax amount is just five per cent and we do not expect any impact on our business. Moreover, many expats are used to paying tax in their home countries and the new tax is nothing new for them,” said Lulu Group spokesperson Nanda Kumar adding that there has been no negative impact on the first day of the implementation of the tax.

 

 

“We have implemented VAT in all our stores in the UAE and Saudi Arabia this morning. Everything is functioning perfectly. There are no glitches or snags in the system.”

The retail chain has 70 stores in the UAE and 20 in Saudi Arabia.

UAE and Saudi Arabia are the first two countries to implement the tax in the Gulf region as they look to raise income other than oil revenue to spend on infrastructure development.

Echoing similar views, general manager of Khalidiya Mall in Abu Dhabi said there will not be any adverse impact on the footfall due to VAT.

“We do not see any negative trend about shopping. All the stores are reporting usual business as of now,” said Mayank Pal, general manager of the mall.

Bubble station, a store specialised in beverages and juices said it’s too early to comment on how the business would be impacted.

“At the moment we see little impact because the tax is not too big but things would become clearer in a couple of months’ time depending on how consumers react to the new tax,” said Jocelyn Furtado, area operations manager of Bubble Station in Abu Dhabi.

Meanwhile, shoppers started paying value added tax on various items they purchased at the retail stores in accordance with the new tax system that came into effect on Monday.

In Abu Dhabi, customers were seen checking their bills and querying about the new tax. All receipts at the store displayed VAT percentage and the tax amount that is charged on the purchase.

“Value added tax of 5 per cent is acceptable and will not make a much difference to shopping,” said Li Jiao, a Chinese student pursuing his Ph.D in Khalifa University.

Nestor Baroma, an architect from Philippines living in Abu Dhabi said he would reduce spending to cut costs as salaries are not going up in tune with the rise in the cost of living in the UAE.

“Maybe I will visit a store once a week instead of twice to cut costs.”

On the other hand, some business are yet to implement VAT. A car rental shop in Al Wahda mall in Abu Dhabi said they are not charging VAT currently.

Money exchanges charge VAT

Abu Dhabi: Exchange houses started levying 5 per cent value added tax on remittances from Monday with the charges varying between Dh1 and Dh2 on money sent to Asian countries in accordance with the new tax system.

 

 

“We do not expect any impact on remittances due to VAT as the amount charged is very less and also people do not have many options to send money back home,” Mohammad Al Ansari, managing director of Al Ansari Exchange told Gulf News over phone.