Set to be introduced in the UAE from January 2018, the five percent value-added tax on entertainment will result in an increase in the cost of water and theme park tickets in the UAE if the companies decide to pass on the tax burden to consumers, say tax experts.

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 would be VAT inclusive considering that it is generally an advertised price. The service providers would have to review their profitability and decide whether they will absorb the VAT cost or pass on to the customers,” Chand noted.

The major theme and water parks in the UAE are IMG Worlds of Adventure, MotionGate, Bollywood Parks, Legoland, Wild Wadi Waterpark, Aquaventure Park, Ice Land Water Park, Dreamland Aqua Park and Ferrari World Abu Dhabi.

UAE residents, however, believe that there will be an impact initially but people will slowly adjust this increase in their entertainment budgets – especially for smaller families.

In Europe, entertainment is usually subject to the standard rate, which varies between 17 and 27 percent. In some cases though, when entertainment is offered by non-profit associations (e.g. theatre), it is exempt. In other cases, sometimes it is subject to a lower rate (e.g. cinemas).

This is an excerpt from an article published The Khaleej Times. To read the complete article click here.