VAT complaints reducing, says UAE's economy minister.

Sultan bin Saeed Al Mansouri says calls from consumers have decreased from 3,261 to 493 daily since Jan 1 launch

Consumer concerns about the impact of value added tax (VAT) in the UAE are reducing, according to Sultan bin Saeed Al Mansouri, the country's Minister of Economy.

At a meeting of the Higher Committee of Consumer Protection, the minister revealed that the number of calls from consumers have decreased from 3,261 on the launch day of VAT (January 1) to 493 two weeks later.

"The committee received growing calls from the consumers during the first days of the VAT application. People had some concerns, but their worries have ebbed with the passage of time," he said in comments published by state news agency WAM on Saturday.

Khalid Ali Al Bustani, director general of the Federal Tax Authority (FTA), added that the complaints received by the committee address three main issues - price hikes, tax registration numbers and erroneous calculation of VAT on some commodities.

"Traders and departments against whom the complaints were filed have been notified and were given a grace period to rectify their strategies as per the tax rules and condition," Al Bustani said.

"The committee is in constant follow-up of the market to prevent any violations and in case of any non-abidance, all legal measures have been taken against the violators," Mohammed Ahmed bin Abdul Aziz Al Shehhi, Undersecretary forEconomic Affairs in the Ministry of Economy, added.

The launch of VAT on January 1 comes as Gulf countries, including the UAE, are looking to reduce their dependence on revenues from oil that are declining in value and generate a higher proportion of revenue internally in order to maintain current levels of economic growth.

Representatives of the six member states of the Gulf Cooperation Council (GCC) signed the VATFramework Treaty early last year, confirming the introduction of a formal VAT system in all the member states although only the UAE and Saudi Arabia launched this year.

The rate is initially set at 5 percent, and similar to most VAT systems there are a range of exemptions. Certain foods and services, including education and healthcare, will be exempt. According to IMF estimates, even this modest rate is expected to realise VAT revenues of up to 1.6 percent of GDP in the GCC countries.

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