Abu Dhabi, UAESaturday 7 December 2019

UAE retailers slow to comply with expanded 'sin tax' with old prices still on show

New regulations mean a pack of cigarettes cannot be sold for less than Dh8 as part of a drive to boost the nation's health

There are strict penalties in the UAE for retailers who do not comply with the minimum price set by the Federal Tax Authority. The National
There are strict penalties in the UAE for retailers who do not comply with the minimum price set by the Federal Tax Authority. The National

Some retailers in the UAE are continuing to sell packs of regular cigarettes for less than Dh8 - despite the new minimum price being brought into force under the Government’s expanded ‘sin tax’ on Sunday.

Despite more than three months advance notice, several shops in the Emirates failed to amend the retail price of some cigarette brands, putting them at risk of hefty fines from the Federal Tax Authority.

Under the new rules, first announced by the UAE Cabinet in August, a cigarette cannot be sold for less than 40 fils, meaning a pack of 20 must cost at least Dh8.

Previously, smokers could buy a pack for as little as Dh3 in some stores.

Water pipe tobacco for shisha will now carry a minimum 10 fils excise charge on every gram, with a starting retail price of at least Dh100 per kilo.

First time offenders caught in violation of the rule could be fined as much as Dh5,000, while repeat culprits face even higher penalties of up to Dh20,000, according to the Federal Tax Authority.

A 50 per cent tax on non-fizzy drinks and 100 per cent levy on e-cigarettes and vaping liquids was also introduced on December 1 as part of efforts to improve the nation's health.

When The National spoke to several retailers on Sunday and Monday, cigarettes were still available for purchase for less than Dh8.

In one mini mart chain in Abu Dhabi, a 20-pack of Pall Mall Blue were priced at Dh7.50, while a packet of 303 Black were marked at just Dh6. In a second store in Al Reef, a 20-pack of West Red was charged at Dh6.

A third retailer, which has stores in Dubai Sports City and Dubai Marina, was selling West Blue and West Duo for just Dh6.

Despite product prices remaining the same in many shops at the beginning of the week, store shelves were left short of the usual selection of cigarettes and non-fizzy drinks as customers bought in bulk ahead of the expected price hikes.

“We have very few cigarettes left, I think people were buying in bulk these past few days because of the new tax coming in,” one retailer said.

“We haven’t actually started changing our prices yet. We will start soon.”

Large chain supermarkets and tobacco specialist retailers appeared to adhere to the new rules though.

At The Smoker’s Centre in Mall of the Emirates, a packet of Chesterfields that previously cost Dh8 were marked at Dh11.50 on Monday.

West Silver was another brand that saw a significant price rise because of the new tax.

Smokers who had previously paid Dh6.50 for a packet would now pay Dh11.

“People are not really complaining about the price increase,” said a cashier in The Smoker’s Centre.

Implementing the new decision [will help to] mitigate damages and costs incurred while fighting diseases that result from consuming these products

Khalid Al Bustani

“They knew about the increase and they were going to be smoking them anyway.”

In October, the FTA called on all businesses registered for excise tax to comply with the minimum price that has been fixed for certain tobacco products.

Khalid Al Bustani, director general of the FTA, stressed that enforcing a minimum price for cigarettes and other tobacco products would “protect consumers and the community health” and prevent “price manipulation” for the purpose of tax evasion.

In September, the authority also launched an awareness campaign inviting businesses to join workshops led by FTA experts giving advice about the new rules and regulations.

Customers at Carrrefour in the same mall were also seeing an increase in the price of their favourite sugary drinks.

The branch was selling a bottle of Gatorade for Dh6.60 on Monday afternoon.

“The government advertised, so people were ready for it,” said one store assistant.

Across Dubai in Studio City, the same bottle was on sale for Dh4.75.

However the cashier insisted that fee was the revised price in accordance with the new tax.

Under the excise tax regulations, the price tag of non-fizzy soft drinks with added sugar or sweeteners has also increased.

The list of taxable sweetened drinks includes those that are "ready-to-consume or that come in the form of concentrates, powders or gels", according to the FTA.

The products have been added to a list of items that were subject to the original 'sin tax', which first came into effect in October 2017 and included tobacco and tobacco products, energy drinks, and carbonated beverages.

In a move to “build a healthy community by curbing the consumption of harmful products”, Mr Al Bustani said the new pricing rules could help put an end to low quality tobacco products being sold in the country.

“Implementing the new decision [will help to] mitigate damages and costs incurred while fighting diseases that result from consuming these products.”

The 100 per cent levy on e-cigarettes and vaping liquid was introduced on Sunday. 
The 100 per cent levy on e-cigarettes and vaping liquid was introduced on Sunday. 

Extra charges for e-cigarettes

Dubai smokers who have turned to electronic cigarettes will also have to dig a little deeper for their favourite brands in the UAE.

E-cigarettes and vaping devices were hit by the new tariff with prices in many cases doubling overnight.

Though the sale of these products was legalised in the UAE in mid-April, many retailers were confused by the pricing rules so did not sell them in-store.

However, on Sunday and Monday, a number of retailers, including several Adnoc stations, started selling them to customers.

In one shop in Abu Dhabi, a Hexa pen and pod was priced at Dh140, while a pack of raspberry refill pods for the same e-cigarette could be purchased for Dh67.

In Dubai, the popular Heet electronic cigarette charger has doubled from Dh250 to Dh500, while the packs of 20 cigarettes, compatible with the device, were exempt from the tax because they contained real tobacco.

The My Blu vape pen was also costing double at The Smoker’s Centre, rising from Dh25 to Dh50.

One online vape retailer, who asked not to be named, said he would start revising the price of his electronic devices and vaping liquids once he "refreshed" his stock.

“From what I believe, yes, the re-pricing starts from today but we have a lot of products that do not comply with the new rules so we are having to order in new items.

“The sale of electronic cigarettes and vapes was only made legal earlier this year so we are still catching up with things.

“Once our competitor stores start changing their prices, we will too, this week probably,” he said.

Updated: December 2, 2019 07:12 PM

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