UAE corporate tax: Can you be charged VAT on top of the printed price?

What gets monitored, gets done. The big failing of this maxim is not that a task is left unfinished, but that anything in the required protocol that is seen as inconvenient is discarded.

Today, those of us who work in the corporate tax arena are trying to comprehend the impact it will have on a variety of industries. Having lived through VAT’s implementation, I am very conscious of the scale of the task.

It will be years before any of us can confidently sit back and dispense advice with ease.

For most business owners, that moment of achieving an apparently casual relationship with the corporate tax framework will probably come earlier.

Whether it’s human nature subconsciously convincing them that it was a large fuss about nothing, or inevitable distractions refocusing efforts elsewhere, many will lose interest.

The fact that reporting is an annual task will only embed a sense of complacency. While the majority of firms have a January to December fiscal year, many have different combinations of months. This means you are always likely to know someone filing an annual corporate tax return.

Its closest regulatory relative, VAT, is almost universally a quarterly exercise. But VAT shows us why some business owners might veer off the path with corporate tax.

Let us look at how these slippery slopes can manifest themselves.

The law in the UAE states that the price displayed is the price paid. This means if a menu states that an item costs Dh100, you will be charged Dh100. Nothing can be added to it.

You might note various additional information at the bottom of a menu of services or goods: municipality charges, service charges, VAT. All perfectly normal. All included.

This is unlike the US, where a plethora of federal, state and local taxes quickly bump up the price for the consumer. It can leave a sour taste in the mouth of an unwary customer.

Given that all sellers of goods and services are subject to the same fees, it does not even make sense to do it. There is no competitive advantage.