VAT cannot be charged if older contracts are silent on VAT

  • Share:

Health clubs cannot charge VAT on membership contracts issued last year – unless they made clear reference to the tax at the time, a senior government official has said.

Ahmad Al Zaabi, acting director of consumer protection at Dubai Economy, said gyms and other clubs could only charge VAT, or any other tax, on contracts signed last year “if the documented agreement terms specified the same”.

His comments came after Fitness First members became embroiled in a dispute with the health club over VAT being applied to memberships signed and paid for last year.

Many members have complained about demands from the company to pay the tax for the 2018 portion of their membership, with some claiming they were denied entry to the club until the tax was paid.

Mr Al Zaabi said: “For example, the agreement should state that the fee applicable does not include VAT or any of the tax concerned, and also specify that the merchant reserves the right to charge VAT or any other tax that may be implemented in the country at any point during the agreement period.”

He said if this does not happen, the contact will be considered “silent” and the merchant “cannot charge VAT from the consumers, or to gain an accepted settlement with their consumers”.