VAT is bringing about a ‘change’ in payments

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The 5% VAT levy on goods and services is bringing a change in the way retail merchants have to manage ‘change’.   Items with the 5% VAT have changed the price from 5.00 to 5.25, thus expecting either the customer to give the 25 fils coins, or take back 75 fils from the merchant.

The UAE government has clarified that there is no scarcity of small coins, however merchants have to gear up now to handle a larger volume of coins.

However, retail will see a bigger impact when more and more customers switch to a cashless mode using their debit cards. The bank charges on debit/credit card will impact profitability that is already under stress due to the 5% VAT.