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Four hidden taxes that we pay in the UAE

Tax

The country brands itself a tax haven, welcoming people from all around the world. But how tax-free is it really?

August 27, 2014 11:01 by



It’s easy to boast about living in the UAE, which does not tax residents on their monthly income; however, there are many different types of taxes, which remain hidden from plain sight.

1.       Tourist tax:

We’ll begin with the latest addition to the bundle, the tourist tax. Launched on March 31 of this year, the fee ranges between AED7 to AED20 per room, per night, at any hotel in the country. This tax has been introduced to provide funding for Expo 2020 projects and is expected to generate AED400 million per year. Do not be misled by the name; this tax is not only applicable for visitors to the UAE. You may be a resident, if you choose to spend the weekend at a hotel you are obligated to pay the fee as well.

2.       Hotel tax:

Hotels will charge between ten to 15 per cent of the room rate, depending on the room or the hotel. While booking a hotel room, you have to account for hotel tax, as well as tourist tax. Long story short, when booking a hotel room, you will have a lot more to pay for than you had previously calculated. Hotel tax is payable to the emirate municipality.

3.       Service tax:

Applicable at a number of establishments around the country, many restaurants will charge between five and ten per cent of the total bill for service tax. You may have been unaware that you were even paying this tax; in most cases, these taxes are calculated into the menu, rather than separated on the final bill e.g. “This menu is inclusive of ten per cent service charge,” in microscopic text at the bottom of the page.

4.       Property tax:

According to a report by Galadari Advocates and Legal Consultants, “In most emirates, tax is payable by residential tenants at a rate of five per cent of the annual rent and for commercial tenants at ten per cent of the annual rent.” Once again, this tax is paid to the emirate municipality.

 

All of these accumulated payments that we unknowingly spend on can account for thousands of dirhams, and while the UAE is still comparatively tax-free, it is clear that the government does not have an aversion to the idea.



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