More than a week after VAT is introduced, sales in Abu Dhabi shops drop sharply

It was at the turn of new year that Saudi Arabia and the UAE introduced Value Added Tax (VAT) on almost all aspects of life in the two nations.

A little over a week after its introduction, the first indications of life under the new tax regime has come out and it is not too rosy.

Corner shop owners are the first people who can accurately assess sentiments immediately after tax reforms.

More than a week after VAT’s introduction, reactions among Abu Dhabi’s corner shop owners have been mixed, reported Qatar Tribune, citing a report in Abu Dhabi-based The National newspaper.
Half of the eight shops visited by The National said sales had come down in the first week. The rest said the situation was the same or it was too early to say since the 5% tax was added to the price of goods and services.

A week ago, The National visited a selection of the capital’s corner shops to gauge the mood ahead of the landmark move by the UAE to bring in VAT. Mohammed Shameam, a manager of one Baqala in the Al Nahyan area, had speculated that it could precipitate a slowdown in sales. Mr Shameam said there had been a small impact over the past week.

“Everybody is talking about it. Cigarettes and [soft drinks] have already gone up in price. Some people now say: how can they afford another 5%?” he was quoted as saying.

“Some salaries haven’t increased and expenses are going up so they’re saying that. But largely it’s OK.”

At another corner shop close to Al Mariah Mall, the manager who did not wish to be named, said business was down over the past week. “Yes, of course. There has been less business,” he said.

“People are buying less and it’s not like before. Instead of buying two litres of milk, people are buying one litre,” the manager said.

Qatar is not immediately thinking of following their neighbours’ examples and implementing the tax regime.