Link September Issue SEP 2017 fin - Page 36

Retail Ashish Panjabi, Chief Operating Officer at Jacky’s Business Solutions, said that people are used to paying VAT or sales tax globally but the only positive side is that it is only five per cent in the UAE. Long run In the West, VAT ranges between 15 per cent and 27 per cent. Retailers said that they don’t have the margin structure to absorb VAT and it has to be passed on to customers. In the long run, Kahanzadah said that the combination of vendors, retailers and customers may absorb VAT. The current law states that there is no VAT reimbursement and tourists will need to pay 5 per cent tax. Khanzadah said that tourists are not the biggest purchasers 36 September 2017 of electronics. The buying power of tourists has come down for the past two to three years due to the decrease in tourist inflow from Russia and China. “The bulk of the sales have always been the local residents. Tourists now contribute around 20 per cent to the total sales,” he said. Panjabi said that the appeal of Dubai has changed a lot of tourists. Once upon a time, they came to Dubai is because it is cheaper and that is not the case now. But the advantage of Dubai is the availability of products such as American, European, Asian and Indian brands virtually available in every mall over here. “We don’t find that sort of range anywhere in the world and this is the advantage that Dubai will continue to hold. VAT refund will not happen as it is very low compared to other parts of the world,” he said. Moreover, he said that electronics is just one on the list for tourists and it is not the main reason for shopping. Dubai is also part of major global launches such as Samsung Galaxy Note 8 and iPhone 8 as the products will be available in the UAE at the same time as the rest of the world. “The impact will be same as the Salik. First month or so, you will avoid the Salik but after that you accept it and move on with it,” he added.