The price of goods. Must you include tax in it?

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According to the Federal Tax Authority, companies, which services and goods are subject to value added tax or excise tax, must specify prices including the tax amount. Otherwise they will bear administrative responsibility.

Authorities ask buyers and customers in the UAE to pay close attention to their rights and to ensure that the prices indicated on the goods or stated by the service provider already included the amount of tax. The specified price must represent exactly the amount that the buyer must pay and for which he will receive the invoice, and in turn, it will indicate both the net value of the goods and the amount of the tax.

The authorities urge companies registered for VAT and excise tax to comply fully with tax laws in order to avoid administrative penalties. When specifying a price without taxes, the penalty is 15,000 Dirhams for each non-taxable tax.

According to representatives of the tax service within its information company for customers “Know your rights”, specifying the price without taking the amount of tax is a violation. If an incomplete price is initially specified, it turns out that in the end, the buyer pays more than he expected when he made the decision to buy.

According to representatives of the Federal Tax Authority, the successful functioning of the tax system in the UAE depends on a common effort that implies strategic cooperation of the three main forces: government, business and the public. The authorities stressed once again their desire to make all tax procedures and aspects as clear and simple as possible, to provide a quick verification service. All this is necessary for the understanding by all parties involved of their rights and obligations, as well as the creation of a transparent tax system in the UAE.

The head of the Federal Tax Authority noted that their goal is not to fine companies, but to ensure their work in accordance with the law. And if in other countries where there is VAT, the tax authority plays only the role of an observer, in the UAE the FTA acts as a tax consultant. A lot has already been done for this purpose: training seminars have been organized, detailed instructions have been developed, etc.

The authorities stressed again their intention to conduct an ongoing dialogue with representatives of the business community to determine their point of view and discuss possible ways to overcome potential problems. This is important for the effective establishment of a tax system that would not violate other business processes, as well as to respect the rights of consumers.