UAE VAT on hotel bookings: the 5% rate and local fees

Yes, hotel stays in the UAE are subject to VAT at the standard rate of 5%, which applies across all seven emirates and has been in place since 1 January 2018. VAT-registered hotels charge it on the room rate and other taxable services, and prices shown to guests should include VAT. Emirate-level fees, such as Dubai’s Tourism Dirham, are separate.

This guide explains how VAT fits into a hotel booking, how it sits next to the local fees in each emirate, and what to check in your booking engine so the direct price is correct and easy to compare.

What is the VAT rate on hotel bookings in the UAE?

The UAE Ministry of Finance states that VAT was introduced across the UAE on 1 January 2018 at a standard rate of 5%. The UAE government portal u.ae describes it the same way: a VAT of 5% is levied at the point of sale. VAT is federal, so the rate is the same in Dubai, Abu Dhabi, Sharjah, Ras Al Khaimah and the other emirates.

The Federal Tax Authority (FTA) explains that end consumers generally bear the VAT cost, while registered businesses collect and account for the tax. For a hotel, that means the guest pays the 5%, and the hotel reports it and pays it to the FTA through its VAT returns.

Does every hotel have to charge VAT?

A business must charge VAT once it is registered. According to the FTA, the mandatory registration threshold is AED 375,000 and the voluntary registration threshold is AED 187,500. Almost any operating hotel will pass the mandatory threshold, but very small guest houses or newly opened operators should confirm their own position with a tax adviser.

Some supplies have special treatment. The Ministry of Finance lists zero-rated supplies, such as exports of services outside the GCC and international transport, and notes that residential property supplies are generally exempt. Whether a particular long-stay apartment counts as residential or as hotel accommodation is a technical question. If you sell apartments and monthly stays, get advice on your exact contracts before you set the tax rule.

Must hotel prices include VAT?

Guests should see VAT-inclusive prices. When VAT was introduced, The National reported Ministry of Finance guidance that the price displayed is the only price that can be charged to a consumer, and that prices must be shown inclusive of VAT, with fines for businesses that do not comply.

For a hotel website, the safe approach is simple. Show a price that already includes VAT on the room list, or show every tax and fee clearly before the guest commits. Never let the total grow on the last page. A guest who sees a lower number on an OTA and a higher number on your payment page will leave, even if the difference is only how the tax was shown. See our guide to fixing booking abandonment for more on this.

How do VAT and local fees appear on a hotel bill?

VAT is only one line. Each emirate sets its own tourism and municipality fees. The table below lists only what we could confirm on official or primary sources. For any emirate not listed, check with its tourism authority.

Emirate	Local fee (verified)	Type	Notes
All emirates	VAT 5%	Percentage	Federal, since 1 January 2018
Dubai	Tourism Dirham, AED 7 to AED 20	Fixed per room per night	Depends on hotel category, maximum 30 consecutive nights. 2026 deferral and exemption measures announced; confirm current status with DET
Dubai	Municipality (sales) fee on hotel rooms	Percentage	The May 2026 package announced an exemption from collection of sales fees on hotel rooms and restaurants; confirm current status
Abu Dhabi	Tourism fee 4%; municipality fee 4% of the invoice	Percentage	From 1 September 2023 the tourism fee was cut from 6% to 4% and the AED 15 per room per night municipality fee was removed
Ras Al Khaimah	Tourism fee AED 15	Fixed per room per night	As stated on u.ae

For Dubai in detail, read the Dubai Tourism Dirham fee explained. For Abu Dhabi, see our Abu Dhabi guide.

How VAT interacts with these fees, for example whether VAT is calculated on a figure that includes a municipality fee or a service charge, depends on the nature of each charge. This is exactly where hotels should take advice from a UAE tax adviser and then set the booking engine to match that advice, rather than guess.

Example: what the guest sees

A worked example, showing VAT only. Example: a hotel sells a room at AED 500 per night before VAT, for 2 nights.

Line	Calculation	Amount
Room, 2 nights	2 x AED 500	AED 1,000
VAT at 5%	5% x AED 1,000	AED 50
Total including VAT	AED 1,000 + AED 50	AED 1,050
Price per night shown inclusive	AED 1,050 / 2	AED 525

A real Dubai, Abu Dhabi or Ras Al Khaimah bill adds the local fees from the table above. A fixed per-room fee is multiplied by rooms and nights. A percentage fee grows with the rate. Your system should calculate each one separately and show each line.

VAT questions hotels should settle with their adviser

Several everyday situations raise VAT questions that do not have a one-line answer. Agree the treatment with your adviser once, write it down, and apply it the same way on every channel:

Deposits and prepayments. When VAT is due on money taken before arrival. See our guide to deposit and prepayment policies.
Cancellation and no-show charges. How to treat amounts kept under your cancellation policy.
Packages. Rooms sold with meals, transfers or experiences from other suppliers.
OTA commissions. How invoices from OTAs, including foreign ones, are treated in your returns.
Long stays. Whether a monthly apartment contract is hotel accommodation or residential.
Tax invoices. What each invoice must show and when you must issue it.

Can tourists claim back VAT on hotel stays?

No. The UAE Tax Refund for Tourists scheme, described on u.ae, is for goods bought from participating retailers, with a minimum spend, and it does not apply to anything consumed fully or partly in the UAE. A hotel stay is consumed in the UAE, so guests should not expect a refund at the airport. Your front desk can say so plainly when guests ask.

How to set up UAE taxes in your booking engine

Confirm your VAT registration and the treatment of each product you sell: rooms, meals, add-ons, apartments.
Add VAT as a percentage tax rule.
Add each local fee as the right type: a percentage for percentage fees, a fixed amount per room per night for fixed fees such as the Tourism Dirham.
Choose inclusive or on-top display, and show every line on the summary before payment.
Test a single room, a two-room booking and a long stay, and compare the totals with your front-desk system.
Check that emails and the guest’s booking page show the same breakdown as the checkout.
Set a reminder to review fees whenever the government announces a change, and record the date you updated each channel.

In goDirects, taxes are set as a percentage or a fixed amount per room per night, shown inclusive or on top, and all totals are calculated on the server so the browser cannot change them. Guests can see converted prices in their own currency, while the charge is made in your hotel currency. See the booking engine, multi-currency pricing, and our UAE hotels page. To check your own tax set-up with us on a live engine, book a demo.

Frequently asked questions

Is VAT charged on hotel rooms in Dubai?

Yes. VAT is federal and applies at 5% in every emirate, including Dubai. A VAT-registered Dubai hotel charges VAT on the room rate and other taxable services. Dubai’s Tourism Dirham and municipality fee are separate local charges, and in 2026 the Dubai Government announced deferral and exemption measures for both, so confirm their current status.

Is the UAE VAT rate different in each emirate?

No. The UAE Ministry of Finance describes a single standard rate of 5% introduced across the UAE on 1 January 2018. What differs between emirates are the local tourism and municipality fees, which are set by each emirate and can be a percentage or a fixed amount per room per night.

Should a hotel show prices with or without VAT?

Show prices that include VAT, or at the very least show every tax and fee clearly before the guest pays. Guidance reported when VAT launched said displayed prices must include VAT. Showing a lower number first and adding tax at the end also hurts conversion, because guests compare your total with OTAs.

Can foreign guests reclaim VAT paid on their hotel stay?

No. The UAE Tax Refund for Tourists scheme covers goods bought from participating retailers and excludes anything consumed fully or partly in the UAE. A hotel stay is used in the UAE, so it is outside the scheme. Guests should treat the VAT on their room as a final cost.

Do small guest houses have to register for VAT?

The FTA sets a mandatory registration threshold of AED 375,000 and a voluntary threshold of AED 187,500. A business above the mandatory threshold must register and charge VAT. A very small operator below it should check its position, and its taxable supplies, with a tax adviser.

Sources

This article is general information, not legal or tax advice.