x

Abu Dhabi, UAEFriday 22 June 2018

Supermarkets and shoppers prepared for price hike as VAT is enacted across UAE

Shop staff worked to change prices in the early hours of Monday ahead of the 7am deadline

Customers shop at Spinneys after on the first day of VAT. Reem Mohammed / The National
Customers shop at Spinneys after on the first day of VAT. Reem Mohammed / The National

While many were fast asleep after a night of New Year’s Eve revelry, shop workers across the country hurried to change price tags on products before the 7am VAT deadline.

At Spinneys in Abu Dhabi, two staff members worked deftly to update prices to reflect the 5 per cent increase which came into effect on Monday.

The Khalidiya branch, which is ordinarily open 24 hours a day, was closed between 12.30am and 5am, seemingly to complete the task.

At 6.30am, one staff member, who was changing prices on cosmetics, said most of the labels had already been updated but assured “if you have any doubt or don’t find a tag on an item, you can ask me for the price.”

Across the supermarket, her colleague worked on relabelling fruits and vegetables.

The supermarket was empty with no early shoppers roaming the aisles to catch the last minutes of pre-tax prices.

A few hours later, Cheelin Lemoine, a home maker, eyed the almond milk display carefully.

“I have been (standing) here for the last five minutes, I just don’t understand, my regular almond milk is usually around fifteen dirhams and I was trying to figure out why it is now seventeen,” said the 28-year-old Australian.

When she realised the increase was the result of VAT, she began calculating her options.

“I am thinking maybe I should get a cheaper one? I can get this other brand for Dh15.25, it is for my husband so I don’t know.”

“I think I will just go with this one,” she said, lifting the cheaper option off the rack. “If he doesn’t like it too bad.”

_______________

Read more:

Shopping boom in Dubai as consumers cash in ahead of VAT

How VAT in the UAE will affect you

Consumer watchdogs ready to crack down on VAT overcharging

_______________

Ms Lemoine said she would have to begin comparing prices of products because of the increased cost of living.

“Usually we didn’t care to compare prices, but now even if it is one or two dirhams cheaper, we will take the cheaper.”

She had five or six items left on her list, “They are all food stuff so a necessity, I can’t cut out on that,” she said.

“Now we have to eat out less, so I have to buy more things here.”

Iman Abdullah, a chemical clinicist, said she did not notice much difference in price after VAT but was annoyed by shops that advertised their products ahead of tax as an excuse to clear surplus stock.

She suggested that supermarkets instead offer discounts to compensate consumers for the mandatory tax, “and this is a win/win for them because they will sell more.”

Ms Abdullah filled her trolley with her “usual items”, a box of coffee, biscuits, butter and other food items.

“I don’t like to pile up things, so I will just buy what I need when I need it, there was no point of overbuying ahead of the tax,” she said.

“I even asked my daughters last night if they wanted to shop ahead of VAT, they said no need,” the 47-year-old Lebanese woman said.

“Maybe people who like to stock up will feel a major difference with the tax.”

Ms Abdullah said VAT was not without its perks however.

“In a way, there is a positive outcome from all of this, now one has to think more about what to buy,” she said.

On Monday, the Ministry of Finance said the Federal Financial System had been updated and was ready to manage all financial transactions related to VAT.

Younis Al Khouri, Undersecretary at the Ministry, said it was facilitating the implementation by having a technical support team on hand as well as a toll-free telephone number dedicated to responding to VAT-related inquiries from federal entities linked to the Federal Financial System.

"This will support MoF in achieving its vision of becoming a global leader in the fiscal field and to contribute to achieving UAE Vision," he said.

In Dubai, prices at Carrefour’s Remraam branch were updated before the supermarket opened for business.

“The pricing has been done in advance in the previous two weeks,” said store manager Binu John.

“There were just about 200 items that we needed to change the price of today,” he said.

Prices were changed over the course of the past month so staff could physically update labels on products on Monday.

Mr John said all Carrefour stores had prepped for VAT in the same way but intended to keep some prices the same to remain competitive.

“All of the negotiations were done at head office, and we have not been involved in that,” he said, adding that the new prices are also now reflected in their internal system.

“It has been clear for our customers to see the right price is in place.”

The supermarket was quiet on Monday morning but Mr John said that was not unusual for the time of year.

“January 1 has been very quiet, as many people are outside or away,” he said.

A price comparison of products conducted by The National before and after the implementation of VAT showed increases of between 5 and 7 per cent on some items and up to 60 per cent increases on imported produce. It is unclear whether or not prices were affected by prior sales or shortages of stock abroad, or had been discounted prior to the introduction of VAT.

Products such as bread and milk had their prices adjusted by 5 per cent while items like yogurt and lentils increased by 7 per cent on Monday.

Surprisingly, some products dropped in price — such as beef tomatoes from the Netherlands which decreased by 30 per cent.

In demand ingredients such as Ghee had been cleared off shelves entirely.

Every taxable item was marked with a T on the supermarkets’ receipts. A breakdown of the total value of taxable items was also printed at the bottom.

Azza Al Khoury, a mother of four girls aged between one and 15, was waiting to see the impact on her bill while shopping at Carrefour in Marina Mall.

“I will know at the cashier,” she said.

Ms Al Khoury estimates it currently costs Dh3,500 a week to feed a household of eight — including her husband, three nannies and driver.

“If we need to improve our country, we have to do it. The government gives a lot to us, but we don’t know how long they can give for”.