UAE Federal Tax Authority: Businesses Must Display Prices inclusive of VAT to Avoid penalties
The Federal Tax Authority (FTA) asserted that all businesses subject to Value Added Tax (VAT) and Excise Tax must display prices of goods and services inclusive of tax in order to avoid administrative penalties.
The Authority called on consumers and service recipients in the UAE to be aware of their rights, noting that prices displayed on items – or announced for provided services – should be inclusive of tax. The displayed price should be the total amount that consumers will pay upon receiving the Tax Invoice, which should include the full price, followed by the total price to be paid and the amount of tax charged therein.
In a new awareness message issued today as part of its consumers awareness campaign (Be Aware of your rights) targeting consumers and service recipients, the FTA stressed that displaying product prices without including the amount of tax charged is considered a violation. The practice misleads consumers who will end up paying more than the amount they expected when deciding to make the purchase. The Authority urged businesses registered for VAT and Excise Tax purposes to fully comply with tax laws in order to avoid administrative penalties, noting that not displaying tax-inclusive prices carries a AED15,000 fine for each tax.
The Federal Tax Authority pointed out that the success of the UAE tax system is a joint responsibility that requires constructive strategic cooperation among three main pillars: the government, businesses, and the community. The FTA reiterated its commitment to clarifying and simplifying tax issues and procedures for the public, in addition to providing quick verification services, in an effort to allow all stakeholders to know their rights and obligations, and establish a transparent tax system in the UAE.
The Authority also reaffirmed its commitment to maintaining constant communication with all businesses to identify their views and discuss ways to overcome any obstacles they may face in order to ensure the effective and seamless implementation of the tax systems, avoid any disruption to their activities, and uphold the rights of consumers and service recipients.
The UAE has successfully established a sophisticated legislative infrastructure for a world-class tax system, relying on in-depth studies and selecting the best practices for UAE society, the Federal Tax Authority concluded.
Federal Tax Authority
By virtue of this Federal Law by Decree a public federal authority shall be established under the name of the Federal Tax Authority. The headquarters of the authority shall be located in the city of Abu Dhabi. The authority shall be in charge of managing and collecting federal taxes and related fines, distributing tax-generated revenues and applying the tax-related procedures in force in the UAE.
The authority shall be managed by a board of directors chaired by the Minister of Finance and a sufficient number of members to be appointed and remunerated by a Cabinet resolution, based on the chairman’s nomination. The authority shall have an independent annual budget that shall be deemed as public funds and exempted from all taxes and fees.
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