UAE shopkeepers will not pass on tax for now

Retailers say they can only raise prices on duty-paid goods, not on existing stock

Dubai: Some UAE retailers on Saturday said they do not expect to increase prices on cigarettes, energy drinks and carbonated drinks on Sunday when the new excise tax comes into effect.

The rate of the new tax is 100 per cent for cigarettes and energy drinks, and 50 per cent for carbonated drinks.

However, not all shops will sell these products at the new tax-included price on Sunday. Some shops said they have not received any notice from suppliers or authorities.

Others are waiting for new batches of the products, some brands of which will reportedly show the new retail price printed on them. For example, many brands of sugary soft drinks already have ‘Dh1.50’ printed on the cans, which is now the ‘old’ price without the excise tax.

“Groceries like us are expecting new invoices from our suppliers reflecting the tax-included prices. We also heard drinks cans will show the new prices — like Dh2.25 — on them, but this is not confirmed or official,” said an Iranian shopkeeper at a grocery in Al Quoz.

“Until we take delivery of the new batches that have been taxed, how can we charge the customer on the existing stocks with us, which we had taken delivery of before the tax? That would be illegal. You cannot charge the customer ‘tax’ on a product that was not taxed.”

The shopkeeper, who has been living in the UAE for 40 years, showed letters from major soft drink makers to retailers confirming their “commitment” to the new excise tax, without specifying the implementation date or rates. “We are waiting for further instructions. I have to sell off what I already have in stock at the ‘old’ price. When the supplier or distributor comes to me with the new, tax-paid batches, I will take delivery and the invoice papers and only then can I sell the taxed product at the taxed price.”

Another grocery shopkeeper in Al Quoz echoed the same points, saying he has not received any intimation from his supplier or the government to raise prices on Sunday. “It will not happen all at once, at all shops in the UAE. The roll-out takes time; we [grocery shops] can only go with what is official, and right now [on Saturday] there is no official directive to my shop allowing me to raise prices from Sunday onwards. Once we take possession of duty-paid products, then, and only then, can we sell the duty-paid products at the duty-paid prices. This [excise tax] does not apply to the existing stocks we have in our shop right now, because we got them before the new tax system came into place,” he added.

A third grocery shopkeeper, in Al Wasl, also said he was waiting for further instructions. “My supplier for [a famous soft drink brand] has given me a letter about the excise tax. I don’t sell cigarettes so I don’t know the situation with that. I cannot confirm right now [on Saturday] that I will sell the soft drink at the higher price from Sunday onwards. It depends what the supplier charges me – accordingly I will charge my customer,” the shopkeeper added.

The situation can lead to some initial confusion with customers paying “old” prices at one shop and higher, tax-included prices at another.

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