Dubai

The footfall at major malls has shown a decrease and it can be due to people celebrating New Year’s celebrations or people staying away from shopping due to the implementation of value-added tax (VAT).

Nadeem Khanzadah, head of omnichannel retail at Jumbo Group, said that it is too early to judge the VAT impact. People are getting up from New Year’s celebrations and will come out to shop only in the evening. Usually, the crowd is less in the morning and it is the same for every New Year.

“We will see a decline in sales during the next two months but once a pent-up demand happens, people will get used to the VAT and it will be business as usual. DSF’s offer value far exceeds the VAT amount,” he said.

Anil Sharma, director at consulting firm Leaders for Growth DWC, said that he is getting used to the VAT. “I saw that Carrefour is crediting my VAT amount as my ‘MyClub’ points until 11th of this month. So, I thought of taking advantage of it,” he said.

Sharma said that his monthly total expenditure is Dh30,000 and now it will go up by Dh1,500.

“So, we have to live with that and offers like these will add value and take advantage of it. I will stand for the best offers in future till the time VAT sinks in,” he said.

Mariam, a housewife from the Philippines, said that she needs to be more careful in future as “my bill has increased by another Dh36 due to VAT”.

Daniel, a tourist from Australia, said that he did not know that UAE is implementing VAT from Monday. “I came to buy a Nikon camera and the price is not cheap here. The VAT is only 5 per cent here when compared to 10 per cent in my country. I don’t think people will stay away from shopping because of 5 per cent. People will get used to it,” he said.

Niranjan Gidwani, CEO of Eros Group, said that the impact will be there for a short term. Some purchasing decisions will get delayed.

“Consumer electronics is not a daily purchase and some consumers may have bought before December while some will wait and see to see the impact. The best part is that the UAE has the least taxation in this part of the world,” he said.

He added that it is possible for retailers to absorb VAT on some high-margin products such as domestic appliances, fridges, washing machine and A/Cs but it is unlikely that the trade may absorb the tax on small-margin products like smartphones and TVs.

“Consumers are very pessimistic and very scared and that is going to hit consumer confidence big time. But when VAT comes into play and consumers see that the prices have not increased much, except for big appliances and big TVs, they will go and buy it but it will impact in the first quarter of next year,” said Ahmad Bakr, research analyst at Euromonitor International Middle East.

Euromonitor expects sales to pick up from June or July, irrespective of the VAT.

Talabat, the online food ordering platform, is adding the VAT amount manually on the final bill after taking the order via credit card from the customer. A customer is forced to pay the VAT amount by cash when the food is delivered. When contacted, a customer care person said that their system had not been updated for VAT and he is not sure when it will be updated.

Tea price hiked

A small cafeteria at Al Safa, which was charging Dh1 for a cup of tea till last year, is now charging Dh1.19 and Dh0.06 as VAT to make it a round Dh1.25.

With Dh1, the VAT amount should be Dh0.05 and the total should be Dh1.05. Either the buyer has to pay Dh0.05 or the cafeteria has to pay back Dh0.95 as change, both of which are unlikely. So the best way is to make it a round figure.

—N.K.C