Dubai warned retailers on Sunday that they would face fines if they tried to use next month's introduction of value-added tax in the United Arab Emirates to manipulate prices, a sign of official concern about the economic impact of the tax. Seeking to boost state revenue hurt by low oil prices, the UAE and Saudi Arabia plan to levy VAT at 5 percent from next month, abandoning a decades-old policy of minimal taxation. Other Gulf Arab states aim to introduce VAT later in 2018.
Dubai Economy, a government body which oversees business in the emirate, said it would conduct field inspections and act on consumers' complaints to prevent price gouging before or during the transition.
Retailers will have to display VAT separately on their bills.
"Dubai Economy is committed to protecting consumers against unscrupulous trade practices. Retailers should comply with their price list and anyone who increases prices without any justification will incur a fine," said Mohammed Ali Rashid Lootah, the body's chief executive.
Dubai's economy relies heavily on tourism and foreign visitors spending in its retail sector, which could be slowed if inflation takes hold.