Tourism is considered as a very important sector for economies which ranges from Oil & Gas revenue in the region. They may have to revise pricing strategies to reflect the impact of VAT in UAE. Over the decades, the GCC nations have collectively hosted millions of tourists with the arrival numbers increasing in most destinations. The likelihood in the GCC context is that is that leisure and hospitality companies will make supplies which would be regarded as taxable.
VAT is Forcing Tourism Companies to Revamp their Supply Chain
VAT is probably going to inculcate remarkable changes the way is business at being done. Note that the tourism division contributes a critical add up to the GDP of the UAE. As per the public reports available in the public domain, the hospitality revenue in the GCC is set to increase to $10 billion by 2020. This is the reason that the impact of VAT on Tourism sector in UAE on this sector needs to be closely monitored.
The Meals in Restaurants will be Levied with a 5% VAT
The meals in leading restaurants would be charged with a 5% VAT. The VAT enlisted organizations in the UAE will have the capacity to assert VAT credit for travel-related costs incurred for business purposes. Interestingly, the UAE is also known as the mainstream area for goal weddings and shopping celebrations. This is the reason that a VAT discount plot for travelers would be implemented in maintaining the status of UAE as a favored destination.
Currently Evaluating the Effect of VAT
It is a commonly observed fact that the businesses of UAE are planning to assess the effect of VAT. In this manner, they would get used to the progressions it will bring which are an appreciated step. Currently, a lot of business out there in the UAE is organizing workshops to familiarize themselves with the effect of VAT. For them, VAT is more than an assessment of bookkeeping yet a general business change.
Another area where airlines will have issues is in the recovery of VAT incurred locally on the capital, fuel and services assets. This has the potential to impact significantly the cash flow. Thus, working capital depending upon the precise treatment afforded claims for refunds.
Thus, it is clear that the implementation of VAT in UAE is going to affect the tourism industries at a large in the UAE.