By Parag Deulgaonkar
There is a lack of clarity on how tax issue is going to pan out: Rotana CEO
Rotana, an Abu Dhabi-based hotel management company, is in talks with a number of hotel management companies in the UAE to better understand the implications of value added tax (VAT) on the industry.
Hotels across the country will have to impose a five percent VAT from January 1, 2018 in addition to existing taxes, which include tourism dirham, city tax, municipal taxes and services – the rates varying in different emirates.
In an exclusive interview with Arabian Business, Rotana CEO and president Omer Kaddouri more clarity is required from the government on VAT as it is just months away.
“There are lot of discussions to be had about VAT as I don’t think there is complete and utter clarity yet on how the VAT issue is going to pan out, I think it should start soon because the fact that it is just around the corner. We are talking with a lot of other hotel chains to try to discuss on what we think the best way forward would be though there is no answer to it yet.”
He added: “There is also going to be lot of clarity coming from the side who is dictating the VAT. So when we go back and say government this, this and this, there's got to be answers to the questions that we are asking in order for this project to start off.
“If it’s going to happen it’s got to happen very quickly otherwise there will be customers who are going to feel it, we will feel it, our owners will feel it so we have to put owner situation, profitability, accountability -- put all of them in one basket -- and get all of these questions answered the way we need it for our industry and have complete clarity.”
In April, Brian Conn, partner, tax advisory services, BDO said some companies in the UAE were likely to absorb VAT and hold prices at the pre-tax level.
“The introduction of VAT does not simply mean you add 5 percent to the current selling price, collect it from the customer and pay it to the government. But before getting to that point, a company has to take a strategic decision on whether to raise prices or hold prices for a while and absorb some or all of the VAT in order to gain market share,” he said.
To read the full interview with Rotana CEO and president Omer Kaddouri, click here.
This issue will effect Hotels greatly.
It's a bit rich to levy this additional 5% on top of what amounts to 20% in taxes already placed on a hotel stay through various means.
Dubai's hotels are already over priced, they really do not need to get any more expensive.
So true...a joke to be adding 5% more to hotel bills when there is effectively 20% VAT already on UAE hotels.....it is just called a series of other names that are meaningless but add up to 20% !! Dubai beach hotels are insanely expensive already in the winter months, compared to ANYWHERE.... and really there is only so much people can take. I for one have already given up on hotels on Jumeirah beach in the high season : it is good , but over priced already.
Usually VAT replaces an assortment of taxes, not sure if this will be case here. I understand VAT to be a federal tax while the hotel fees are mostly local. Let see.