A new value-added tax levied on entertainment is likely to result in increased costs for attractions operators based in the UAE.
National UAE newspaper, the Khaleez Times, today raised the issue, noting that it will add five per cent to the cost of tickets for local water and theme parks - but the impact is likely to be wider than that.
Set to be introduced in January, the five per cent VAT will result in an increase in the cost of park tickets as well as impacting the cash-box takings within FECs.
"Entertainment constitutes a service. Seeing that there is no exemption or zero rate applying, all types of entertainment will be subject to five per cent VAT," said Thomas Vanhee, founding partner, Aurifer Middle East Tax.
Girish Chand, director at MCA Management Consultants, is of the view that there is no exempt category in the entertainment sector, hence all activities of the entertainment industry would come under VAT. "It is expected that the ticket prices (for theme parks) would be VAT inclusive considering that it is generally an advertised price," Chand said.
"The service providers would have to review their profitability and decide whether they will absorb the VAT cost or pass on to the customers."
