Shopping in the UAE – why cheap
Arab Emirates is one of the most popular destinations for shopping tourism. Prices for products of world brands in the UAE may be lower than in Russia or even the country of origin of goods. In the UAE low customs duties, there is no NSP tax, and VAT tax is only 5%. Until 2018 and VAT tax was 0%.
However, not everything is so cloudless. Brand stores often establish an overestimated margin, in different shopping center can be very different in terms of prices. About everything in order.
This article describes the situation for February 2021. Now in the UAE due to the pandemic, large balances of all goods in warehouses were formed. It’s time for shopping – more discounts, more stocks, more benefits. It is a pity that Dubai Shopping Festival has already ended (passed until January 30).
Looking for shopping in the Arab Emirates, tourists say different. Someone is surprised that everything is cheap here, someone wrinkles that everything is expensive. As usual and happens, the truth somewhere in the middle.
In fact, trading enterprises in the UAE have an incoming price for goods lower than in Russia. But they establish their trade markup, and it can vary from 0 to infinity. It often happens that some kind of thing in the store in Dubai Mall costs 20-30% more expensive than in the store in Mall of Emirates.
Some brands establish a clear pricing policy for all its distributors and dealers. In this case, the desired handbag of the expensive brand will cost the same in Russia, and in the Arab Emirates, and in China, and in the US.
We will understand in detail how the incoming price for goods is formed when importing it from abroad. To do this, tell what duty, VAT and NSP.
What is a custom duty
This is the collection of the state for the importation of goods to its territory. It can be calculated as a percentage of the cost of goods or be expressed at a certain price for the import of a kilogram (units, liters, meters) of goods.
Customs duty additionally performs the function of protecting the local manufacturer, it gives goods to its manufacturer’s price advantage over imported. In the UAE, there is no particular need to protect local producers.
Since most goods when importing into the UAE, a customs duty is charged in the amount of 5%. There are exceptions.
For alcohol charges a fee of 50%, hence very high prices for alcohol. Details in our article "Alcohol in the UAE – prices and rules". For the importation of tobacco products, a fee is charged 100%, but prices for cigarettes in the Arab Emirates remain quite acceptable. Details in our article "Prices for cigarettes in the UAE". Vividly import duties in the Arab Emirates we have shown on the photo nearby, click on the photo to enlarge.
As for the goods that are interesting for shopping lovers. In the UAE, the situation is understandable, 5% duty. In Russia, more complex rules. For example, the duty for the coat is charged for a kilogram. In such a situation, it is difficult to say where the duty is lower, in Russia or the UAE, depends on the weight of the coat itself. With leather products, the situation is simpler, the duty in Russia is 12.5%, which is clearly higher than in the UAE.
What is NPT
Tax of sales. Charged by the state once when selling goods to the final consumer. This tax is actively used in the US. In Russia, he once existed, but from January 1, 2004 canceled. In the UAE it is not and never.
What is VAT
Value added tax. Many ours sincerely believe that VAT does not concern them that it is a tax on company. This is a great misconception, VAT – Consumption Tax.
Sellers are not required to write VAT on checks, and most do not write. Maybe the ours had an invalid stereotype from this that VAT does not concern them. McDonalds always writes the amount of tax on the checks, watch the photo nearby, click on the photo to enlarge.
For example, when buying chearase sausages for 100 rubles in the store, each consumer pays 15.25 rubles of VAT tax. This money consumer pays the store, and the store already gives the state.
Remember that VAT pays the consumer! When the store buys products, he pays VAT to his supplier, then lists the state the difference between VAT when buying and selling. This is the main convenience of VAT for the state – the tax is charged with parts at all stages of the movement of goods from the workshop to the consumer.
Even if the goods deteriorated or drowned in the sea during transportation, the state still gets tax from it. It is for this reason that the overwhelming number of countries use the VAT tax system.
At the time of the last update of this article (February 2021), VAT in the Arab Emirates is only 5%. In Russia, VAT – 20%. feel the difference!
Introduction of VAT tax in 2018
From January 1, 2018, VAT tax was introduced in the UAE at a rate of 5%. The tax concerns not all goods, there is a long list of food, medical and educational services and other things, for which VAT will be 0.
Tax pay only companies whose turnover exceeds 3.75 million dirhams (about 1 million US dollars). In the future, VAT will pay all companies, but when it happens, the government can not say yet.
In Russia, the VAT tax rate is 20% (until 2019 was 18%). On some food and services it is reduced to 10%. In any case, VAT in the UAE below, which means prices for shopping lovers will potentially be more interesting.
Naturally, prices in the shops in the UAE have grown, the vacation price for tourists rose a little. But badly fear it is not worth it. According to the administration of the tax of Calid al-Bustani (in the center in the photo nearby, click on the photo to increase), the head of the Federal Service for Taxes of the UAE: "The introduction of VAT and new excise taxes will be offended by 1.4% inflation". The digit is unpleasant, but not terrible. It is already clear that his forecast was faithful.
By the way, these 5% VAT tax tourists have the right to return themselves when leaving the country. The procedure for returning VAT in the UAE there are many features. Read about this procedure Our detailed article "Return VAT in the UAE".
Take for example a leather handbag, which at the exit from the factory costs 100 US dollars. Calculate what are the entrance prices for shops in the UAE and Russia. For ease of calculations, we will not take into account the cost of transportation and additional costs.
For our Store: 100 + 12.5% (duty) + 20% (VAT) = 132.5 USD.
For the store in the UAE: 100 + 5% (duty) + 5% (VAT) = 110 USD.
As can be seen from the calculations, the store in the Arab Emirates the input price is 20% lower. Therefore, it has the opportunity to sell this product cheaper. Will it? Wants Lie? Lee has the right? Open questions.
Suppose the country of origin of this handbag – Italy. Now many readers will say: "You need to go to Italy, there is a bag of 100 dollars". Nothing like that, even in Italy, the price will be higher, because in the Italian store the handbag arrives already with VAT tax 22%. In Italy, the store will buy it for 122 USD.
An important moment that in Italy can be made VAT refund (Tax Free) upon departure from the country. In the UAE, such a system already has. But the system is now working only with some stores – participants of the program. Until seriously rely on it.
Tips wishing to buy cheap
– If the tourist comes for shopping for the first time, then immediately goes to the largest shopping center – Yas Mall in Abu Dhabi or Dubai Mall in Dubai. Of course, it is interesting to see these huge shopping centers, but it’s not very profitable to buy there. It is in large shopping center. Prices are overestimated. To buy cheaply, go to the shopping centers smaller;
– Stay away from the tourist zones, where prices are always higher;
– In the UAE spent shopping festivals with large discounts, lotteries and promotions. For example, Dubai Shopping Festival passes all January or Dubai Summer Surprises passes from July 1 to August 12. Try to come exactly at this time, you will find many interesting proposals;
– After the end of the sacred month of Ramadan, the holiday of Eid Al-Fitre comes. At this time, a huge amount of sales and shares are satisfied. However, remember that the dates of Ramadan and Al-Fitra IDs are changing every year. Watch the calendar in our article "Holidays in the Arab Emirates";
– Can be paid by dollars and euros, but the course will be very disadvantageous. For shopping, change money on Dirhama, so most profitable. Read our review "Exchange of money in the UAE";
– Read the forums where tourists already visited the UAE are sharing their experience. The situation is changing rapidly, the prices "jump". In this article, we give analytical information, explain the main points for tourists. But on the status of the shopping guide we do not pretend;
– We were told about the most interesting emirate gifts and souvenirs in detail in our review "What to bring from the UAE".
Successful purchases in the Arab Emirates, and read our interesting and useful articles about this country (Links below).