Hotel stay to cost more

February 14, 2018
Saeed Haider

Saudi Gazette

— Guests staying in hotels and furnished apartments will now have to pay more on room tariff by way of the newly-introduced municipal tax on top of Value-Added Tax (VAT) and the already existing service tax.

According to hotel industry sources, a guest will now have to pay somewhere between 25% and 30% extra on their room tariff.

This will be in addition to food and beverages and other taxable facilities in the hotel.

The Ministry of Municipal and Rural Affairs has imposed a flat levy of 5% on each room occupied in hotels and furnished apartments across the Kingdom.

The levy for rooms in three star hotels and downwards will be 2,5 %.

This is on top of 5% VAT which is collected by the General Authority of Zakat and Tax (GZAT).

The levy, known as municipal tax, came into effect on Wednesday.

Municipal tax, however, will be levied only on occupied rooms.

It is mandatory for all hotels of any size, furnished apartments of any standard and any other commercial residence facilities.

Hotels and furnished apartments will deposit the tax taken from guests with the ministry every month.

Hotels and other commercial residential facilities will have to register with the ministry which in turn will issue them a unique number to get access to their accounts in the ministry.

The hotel industry is passing through an extremely tough period due to the mushroom growth of hotels in Jeddah, Riyadh, Dammam, Makkah and Madinah.

“Occupancy is not even 60% during the peak period,” said a hotel executive in Al-Khobar.

The business community feels that municipal tax should be paid by hotels as guests are already burdened with several other surcharges.

Hotels in Dammam, Al-Khobar, Riyadh, Jeddah, Makkah and Madinah and elsewhere in the Kingdom have displayed notice about the 5% municipal tax.

It has also been reported that business establishments, hotels, furnished apartments and many other commercial centers will be levying taxes on various other municipal services like garbage collection, etc.

February 14, 2018
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