UAE Hospitality and Tourism VAT 2026: Hotels, Restaurants, and Tourism Fees
UAE hospitality VAT guide 2026: VAT on hotel stays (5%), Dubai Tourism Dirham, municipality fee, restaurant VAT, tour operator VAT treatment, and input.
UAE hotel VAT treatment
| Charge | VAT treatment | Notes |
|---|---|---|
| Room rate (accommodation) | 5% VAT | Standard-rated supply |
| Food and beverage in hotel | 5% VAT | Restaurant / room service |
| Spa and wellness services | 5% VAT | Included in standard rate |
| Conference / event space rental | 5% VAT | Standard-rated |
| Tourism Dirham (Dubai) | No VAT | Government levy — outside VAT scope |
| Municipality fee (up to 10%) | No VAT | Government levy — outside VAT scope |
| Service charge (10%) | No VAT on the charge itself | Part of the total bill — VAT still applies to room + F&B |
| Airport transfer (own hotel service) | 5% VAT | Standard-rated transport supply |
UAE restaurant and F&B VAT
- All food and beverage sales are 5% VAT: Whether dine-in, takeaway, or delivery — all restaurant sales to UAE customers are standard-rated at 5%. There is no zero-rating or exemption for basic food in UAE (unlike some countries). This includes fast food, cafes, fine dining, and food courts.
- Delivery platform aggregators: When a restaurant uses Talabat, Careem, or Deliveroo, the supply is still made by the restaurant — the platform charges a commission. The restaurant charges 5% VAT to the end customer on the food price. The platform’s commission to the restaurant is a separate B2B service at 5% VAT.
- Input VAT recovery: Restaurants can recover input VAT on food and beverage purchases from UAE suppliers (where VAT was charged), kitchen equipment, fit-out costs, and overheads — as all revenue is standard-rated. Full input recovery is available.
UAE tour operator VAT
- UAE domestic tours: Tour packages sold to customers for activities within the UAE (desert safaris, city tours, dhow cruises) are standard-rated at 5%.
- International tour packages: If the tour package is for travel and activities wholly outside the UAE, the place of supply may be outside UAE — potentially zero-rated if the customer is outside UAE, or requires specific analysis.
- Tour operator margins: UAE does not have a Tour Operator Margin Scheme (TOMS) equivalent. Each service within a package tour must be assessed for VAT in the country where it is supplied. Input VAT on UAE-based services (hotel, transport, activities) is recoverable by VAT-registered operators.
UAE hotel, restaurant, or tourism operator with VAT questions?
We advise on hospitality VAT compliance, municipality fee treatment, and input recovery. Fixed fee.
See VAT servicesFrequently asked questions
Is the Dubai Tourism Dirham subject to UAE VAT?
No — the Dubai Tourism Dirham (AED 7 for hotel apartments, AED 10–20 for hotels by star rating per room per night) is a government levy collected by hotels on behalf of the Dubai Department of Economy and Tourism. It is not a supply for VAT purposes — no VAT is added to the tourism dirham amount. Hotels collect it separately and remit it directly to the authority.
Do UAE hotels charge VAT on the full bill including municipality fee?
VAT is charged on the hotel’s supply — the room rate and any taxable services provided by the hotel. The municipality fee (up to 10% of room rate in Dubai) and Tourism Dirham are government levies — they fall outside the scope of VAT. The hotel does not charge VAT on the municipality fee or the Tourism Dirham amount, only on its own supply price.
Is the hotel service charge subject to VAT in UAE?
The 10% service charge is typically treated as part of the hotel’s consideration for the supply — meaning VAT applies to the room rate plus the service charge together, not just the room rate alone. If the service charge is a pass-through to staff (gratuity), the VAT treatment may differ — hotels should confirm with their VAT adviser how they have structured this in their invoicing.
Can a UAE restaurant recover VAT on its commercial kitchen equipment?
Yes — since all restaurant revenue is 5% standard-rated, restaurants have a full input VAT recovery position. Input VAT on commercial kitchen equipment, fit-out, smallwares, cleaning supplies, and food purchases from UAE suppliers (where the supplier charged VAT) can all be reclaimed in the quarterly VAT return.
Official UAE Government Sources