On the whole, the introduction of value-added tax (VAT) in the UAE has gone pretty smoothly.
Sure, there have been a few problems with uncertainties around whether you need to pay VAT on services you paid for last year, and confusion over VAT in free zones. But basically, the introduction of VAT has been pretty simple – outlets just add 5% on to the price of whatever you’re buying, and that’s that.
But one thing that consumers have struggled with is vendors charging over the odds for products, and having the price increase attributed to VAT – even if no proof of VAT being charged is provided.
That’s what the UAE’s Federal Tax Authority (FTA) has tried to address with its recent ‘Be Aware of Your Rights’ campaign. The campaign says that, if you’re a taxable business, you should be issuing tax invoices on any of the goods and services sold. And, likewise, if you’re a consumer, you should expect a tax invoice on anything you buy.
The whole point of this is to create transparency for the consumer. You should know how much you’re paying in terms of the actual product, and how much you’re paying in VAT. Being provided with a tax invoice helps that.
Now, this doesn’t have to be a separate receipt, but it does need to be a receipt that clearly shows the breakdown between the cost of products and the VAT charged to the final bill.
The FTA is going hard on enforcing this. Its campaign warned taxable businesses that, if it fails to issue tax invoices, it’ll enforce administrative penalties of AED 5,000 per tax invoice or alternative document that it failed to issue.
So, there you have it. As a consumer, you have a right to understand how much of your total bill is going on VAT, meaning you should always ask for tax invoices showing just that.