As receding oil prices start to affect the UAE government’s budgets, and increased taxation is sought as one remedy, experts have warned that the introduction of VAT to the travel and tourism industry there needs to be carefully considered.

Hotels already have to add a 10% service change and a 10% municipality fee to their room rate, while serviced apartments also have a room tax of US $4.08 per day for four-star and $5.45 for five-star properties, potentially affecting consumer perception of the price of Dubai. Even 5% VAT could have a further impact, which the industry may prefer to absorb rather than pass to customers.

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