Exclusive: Is there a new 10 percent tax in Dubai?

 

Is value-added tax soon become a reality in Dubai?

Don’t be surprised if your purchase bill has increased by ten percent compared with that of a few weeks before.

The cost of a cup of coffee, or whatever you purchase, at Starbucks or Tim Hortons will cost you ten percent more than usual.

A notice inside the Starbucks coffee shop on Sheikh Zayed Road in Dubai, UAE, says, “This store is applicable for ten percent municipality fees”. Next door at Tim Hortons, a notice says: “Dear Guest, ten percent service tax will be levied on all bills of purchase as per Dubai Municipality’s directive.”

A notice about the new tax/fee inside Tim Hortons on Sheikh Zayed Road, Dubai

A notice about the new tax/fee inside Tim Hortons on Sheikh Zayed Road, Dubai

It’s not clear yet whether this is a fee or a tax. Journalists at Mediaquest contacted Dubai Municipality, Dubai’s Department of Economic Development (DED) and the UAE’s Ministry of Economy.

The customer service department at DED told TRENDS that they are not aware of any new ten percent tax or fee. Generally, ten percent tax is levied on “licensed” restaurants that serve alcohol and it’s a municipality fee rather than a DED fee.

On its part, Dubai Municipality said that the ten percent tax on restaurants is not a new thing. When questioned further on the specific coffee shops, a representative who answered the phone at Dubai Municipality’s customer service department expressed his unawareness about the new rule. He directed us back to the DED.

However, the customer response department of Alshaya Group, which owns the Starbucks franchise in the region, said the new ten percent tax has been introduced in parts of Dubai and it will be introduced to the rest of the UAE soon.

A notice about the new 10 percent municipality fee inside the Starbucks outlet along Sheikh Zayed Road, Dubai

A notice about the new 10 percent municipality fee inside the Starbucks outlet along Sheikh Zayed Road, Dubai

In the absence of any clarification from the government departments, it is unclear whether this new ten percent tax or fee is a precursor to value-added tax, which the UAE has been planning to introduce in the country to boost state revenues.

* If you see such notices in your favorite restaurants and coffee shops, please take photos, or selfies, and email us along with your comments at research.trends@mediaquestcorp.com. Please do not forget to mention the name of the outlet and its location.

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