Three months back just after celebrating the New Year and
delight to become the host of international event named World Expo in year 2020, Sheikh Hamdan bin Mohammed, Crown
Prince of Dubai and chairman of the Executive Council announced to charge a fee
as tourism tax from tourists visiting and staying in tourism rentals in the
city.
What is Dubai tourism
tax?
The tourism tax in Dubai is a small fee which will be
applied per room, per night. Depending on the rank and hotel type the amount ranges
from AED 7 (£1.17) to AED 20 (£3.33). All guests staying in all hotels, hotel
apartments, guest houses and holiday homes are required to pay this fee with
their bills. The new charge will roughly add total £23 to the total holiday
cost in Dubai for a week. After being listed among United Nations World Tourism
Organisation (UNWTO) top 10 fastest growing tourism hotspots for year 2013, it
is clear that the city is receiving huge number of tourists throughout the
year. Further, expo 2020 is expected to increase
the total number of tourist to 20 million, which is double to the number of
2012.
Type of Hotel
|
Applicable Tourism Dirham Tax per night
|
Five-star hotels
|
AED 20
|
Four-star hotels
|
AED 15
|
Three-star hotels
|
AED 10
|
Deluxe Hotel
Apartments
|
AED 20
|
Superior Hotel
Apartments
|
AED 15
|
Standard Hotel
Apartments
|
AED 10
|
One-star/budget
hotels and Guest Houses
|
AED 7
|
Primary causes of
implementing Dirham Tax in Tourism sector
According to estimates Dubai will have to bare total cost of
Dh32bn for hosting the international event of World Expo
in 2020. With total amount of Dh26bn for investment, rest of the amount is
considered to be operating cost of this event.
Having considered the huge cost of this event, State Government decided
to find some suitable way to fund this event. Tourism is the economical
backbone and major earning sector of this emirate. After considering its
earning potential, governmental authorities decided to earn little extra from
tourism and formulate a new kind of fee as Tourism Dirham Tax. Their major aim
is to fund the upcoming event. Further, Dubai Corporation for Tourism and
Commerce Marketing DTCM ensure that the introduction of new fee is the significant
help which will support emirate to maintain its competitiveness on global stage
by nurturing two pillars of trade and tourism in the region. Estimates showed
that total capital gains based on these figures will rise the revenue between
Dhs140 million and Dhs400 million a year by 2020 if each tourist will stay in a
hotel or short stay even only for a night.
The hospitality sector is not surprised after hearing this
news as they are already aware that the same kind of tax is being charged in
several other destinations across the globe. However, Dubai is facing
criticism; experts mentioned that tourism tax is not expected to negatively
affect the travel and tourism industry as the emirate has lot of things to
offer along with year-round sunshine, white beaches and direct flights of seven
hours to several important destinations across the world. They also expect that investing the tax
collected from visitors will further improve tourism sector in emirate.
Concerns on Tourism Dirham
Tax
Authorities tried their best to minimize any kind of
negative impact over the tourism industry, they are not successful
completely. Despite its low amount,
tourists are not happy with additional charges. It looks a small amount but it
is actually an additional amount that will be charged daily basis. The tax may
not affect those who are staying for shorter period of time but it can be a
significant amount for visitors who are staying for longer time period. It is expected that this will discourage
tourists to stay longer in Dubai.
Official from hospitality consultancy mentioned in their discussions that Government implemented this Tourism Dirham Tax just to provide sufficient fund for infrastructure developments which are planned forexpo 2020. Further DTCM has issued an official circular regarding the fee structure to all hotels. It has also been declared that Dubai hotels will be penalized and asked to pay the fine of total AED 15,000 if they do not implement the new fee with correct per night rate from March 31. The circular also mentioned that the tax must be specified in separate line on the bill. This will be an additional amount that every visitor needs to pay other than Municipality and service charges.