VAT Faq's

1. Q: What will the 5% VAT be charged on?

E.g: Below table is indicative room charge for 5 star hotel

Description Room Rate + Service Charge
Room Rate 1,000
10% Municipality Fee 100
10% Service Charge 100
Gross room rate 1,200
Tourism Dirham 20
Sub-Total 1,220
5 % VAT 1100 x 5% = 55
Grand Total 1,275
A: VAT will be applied on Room rate + service charge as demonstrated in the above table.

2. Q: Is VAT charged on customs duties?

A: VAT will be charged on the final amount including custom duties. Import VAT can be recovered as per the VAT regulations.

3. Q: Will VAT be applied on payments received in 2017 for 2018 bookings?

A: Any bookings for supply of goods and services to be delivered in 2018 will be subject to VAT. VAT will also be applicable on long term stays in 2018 (and onwards) whether or not the contract was signed prior to the issue or implementation of the law. Please refer to article (70) of the Cabinet Decision No.

(52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax.

By way of an example, VAT will be applicable in the following scenarios:

a. Reservations made for 2018 before the official VAT announcement.

b. Reservations made for 2018 after VAT announcement.

c. Long term stay guests before VAT announcement continuing their stay in 2018.

4. Q: In cases where some units are owned and leased out by non-licensed persons, how is VAT going to be charged?

A: VAT will be charged in the same manner as a licensed business/person. Any business/person having taxable supplies over AED 375,000 over the last 12 months should register and account for VAT on all supplies after registration, even if the person is not duly licensed to conduct activity.

5. Q: Is VAT applicable to below services?

a. Tourist Visa. The Tourist Visa fee will be subject to a cabinet decision on Government fees. However, any third party services relating to processing and issuance of tourist visas are subject to VAT.
b. Local private transport (Hotel transportation for guests). This follows the Exempt rule, so the customer shall not be charged VAT, except as otherwise set out in article (45) of the Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax
c. Complimentary services. If a complimentary service is funded by the Hotel and is provided to the guest without any consideration, then it is not taxable. Please refer to article (28) of the Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax
d. No show and cancelled bookings.are taxable so long as funds have been received by the hotel.
e. House Use (Rooms used by hotel staff for free). VAT on house-use depends on the details of the nature of accommodation provided. Please refer to article (53) of the Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax
f. Rebate/discount.The price of goods and services may be reduced by the value of the discount and then VAT will be applied to the post discount rate. Please refer to article (28) of the Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax
g. Redemption of Loyalty points /Rewards.This is typically taxable but dependent on the nature of the loyalty program, whether the reward points have been purchased or granted for no consideration.
h. Sales Offers for Free night stays (e.g. Pay for 2 nights stay for 3). The price of goods and services may be reduced by the value of the discount. Please refer to article (28) of the Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax
i. Reservations from Government entities.Taxable.
j. Barter agreement. Taxable at the market value of the goods or services. Please refer to article (25) of the Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax.
k. Outsourced staff/ Shared services.Taxable.
l. FOC Items (Free of Charge). Similar treatment as rebates, discounts and complimentary. Depends on the nature of the FOC and how it has been granted. Please refer to article (28) of the Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax
m. Incentives/Commission to third party (Local and overseas).Taxable.
n. Security Services/ Valet/Contract staff. Taxable.
o. Housekeeping / Engineering/Catering services to the leased outlets inside the hotels. Taxable.

6. Q: Is VAT applicable on advance payments immediately or at the time the service is availed?

A: VAT will be applicable on advance payments immediately. As an exception, VAT on advance payments received in 2017 for 2018 bookings will be payable in 2018. Please refer to article (25&26) of the Federal Decree-Law No. (8) of 2017 on Value Added Tax

7. Q: Is VAT applicable on refundable deposits?

A: If a deposit is completely refundable, it is not subject to VAT. If there is any administration fee included in the refund, the administration fee is taxable.

8. Q: Is VAT applicable on MICE businesses?

A: MICE businesses are subject to VAT, however a refund scheme for foreign businesses is detailed at article (67) of the Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax

9. Q: Implication of VAT on 1St January 2018 for Hotel

On New Year's Eve 31-Dec-2017, hotels will be operating beyond midnight and as such bills will be produced during early hours of 1-Jan-2018. Are these charges subject to VAT?

A: VAT shall be applicable at the earlier of:

a.The time of opening of the business on 1 January 2018.

b.7AM on 1 January 2018.

10. Q: Is VAT applicable on long term leases? In light of residential leases being exempt from VAT, how are hotel leases going to be treated?

A: Stays in hotels are taxable irrespective of length of stay

11. Q: In cases when goods and services are supplied on a daily basis, but invoicing is done on a quarterly basis, when is VAT recorded? At the time of issuing the invoice or monthly?

A: At the time of issuing the invoice. Please refer to article (25&26) of the Federal Decree-Law No (8) of 2017 on Value Added Tax.

12. Q: Is it mandatory to mention the VAT registration number on the invoices/pro-forma/quotation?

A: Tax Registration Number has to be mentioned on invoices for all registrants.

Q: Integration of VAT software with Hotel PMS & Back office

As per the VAT regulations every establishment has to purchase the VAT software approved by the FTA and to be linked with back office (accounting software). As the Hotels are using two systems (E.g Opera(Front office) & Sun system (Back office),In this case which one to be linked (Opera shows full transactions and the back office shows the summary).

A: DTCM will update the industry as soon as further information has been in relation to the software integration.

13. Q: Clarity on payment cycle & method, as well as list of violations.

A: Payment cycle is dependent on Tax periods which are allocated to each entity as per its turnover. Method payment shall be electronic. Administrative penalties are listed in the Cabinet Decision no. 40 of 2017 on www.tax.Government.ae

Tables of Violations and Administrative Penalties
Appendix to the Cabinet Decision No. (40) Of 2017

Table (1): Violations and Administrative Penalties related to the Implementation of the Federal Law
No. (7) of 2017 on Tax Procedures Administrative Penalty (AED) Description of Violation
Description of Violation Administrative Penalty (AED)
1 The failure of the person conducting Business to keep the required records and other information specified in Tax Procedures Law and the Tax Law (10,000) for the first time. (50,000) in case of repetition.
2 The failure of the person conducting Business to submit the data, records and documents related to Tax in Arabic to the Authority when requested. (20,000)
3 The failure of the Taxable Person to submit a registration application within the timeframe specified in the Tax Law. (20,000)
4 The failure of the Registrant to submit a deregistration application within the timeframe specified in the Tax Law (10,000)
5 The failure of the Registrant to inform the Authority of any circumstance that requires the amendment of the information pertaining to his tax record kept by Authority. (5,000) for the first time.
(15,000) in case of repetition
6 The failure of the person appointed as a Legal Representative for the Taxable Person to inform the Authority of his appointment within the specified timeframe. The penalties will be due from the Legal Representative's own funds. (20,000)
7 The failure of the person appointed as a Legal Representative for the Taxable Person to file a Tax Return within the specified timeframe. The penalties will be due from the Legal Representative's own funds. (1,000) for the first time.
(2,000) in case of repetition within (24) months.
8 The failure of the Registrant to submit the Tax Return within the timeframe specified in the Tax Law. (1,000) for the first time.
(2,000) in case of repetition within (24) months.
9 The failure of the Taxable Person to settle the Payable Tax stated in the submitted Tax Return or Tax Assessment he was notified of, within the timeframe specified in the Tax Law. The Taxable Person shall be obligated to pay a late payment penalty consisting of:
- (2%) of the unpaid tax is due immediately once the payment of Payable Tax is late;
- (4%) is due on the seventh day following the deadline for payment, on the amount of tax which is still unpaid.
- (1%) daily penalty charged on any amount that is still unpaid one calendar month following the deadline for payment with upper ceiling of (300%).
10 The submittal of an incorrect Tax Return by the Registrant. Two penalties are applied:
1. Fixed penalty of:(3,000) for the first time.(5,000) in case of repetition

2. Percentage based penalty shall be applied on the amount unpaid to the Authority due to the error and resulting in a tax benefit as follows:

- (50%) if the Registrant does not make a voluntary disclosure or he made the voluntary disclosure after being notified of the tax audit and the Authority has started the tax audit process, or after being asked for information relating to the tax audit, whichever takes place first.

- (30%) if the Registrant makes the voluntary disclosure after being notified of the tax audit and before the Authority starts the tax audit.

- (5%) if the Registrant makes a voluntary disclosure before being notified of the tax audit by the Authority.
11 The Voluntary Disclosure by the Person/Taxpayer of errors in the Tax Return, Tax Assessment or Refund Application pursuant to Article 10 (1) and (2) of the Tax Procedures Law. Two penalties are applied:
1. Fixed penalty of: (3,000) for the first time.(5,000) in case of repetition

2. Percentage based penalty shall be applied on the amount unpaid to the Authority due to the error and resulting in a tax benefit as follows:

- (50%) if the Person/Taxpayer makes a voluntary disclosure after being notified of the tax audit and the Authority starting the tax audit or after being asked for information relating to the tax audit, whichever takes place first.

- (30%) if the Person/Taxpayer makes the voluntary disclosure after being notified of the tax audit but before the start of the tax audit

- (5%) if the Person/Taxpayer makes voluntary disclosure before being notified of the tax audit by the Authority.
12 The failure of the Taxable Person to voluntarily disclose errors in the Tax Return, Tax Assessment or Refund Application pursuant to Article 10 (1) and (2) of this the Tax Procedures Law before being notified that he will be subject to a Tax Audit Two penalties are applied:
1. Fixed penalty of:(3,000) for the first time.(5,000) in case of repetition
2. (50%) of the amount unpaid to the Authority due to the error resulting in a tax benefit for the Person/Taxpayer.
13 The failure of the Person conducting Business to facilitate the work of the Tax Auditor in violation of the provisions of Article (21) of the Tax Procedures Law. (20,000)
14 The failure of the Registrant to calculate Tax on behalf of another Person when the registered Taxable Person is obligated to do so under the Tax Law. The Registrant shall be obligated to pay a late payment penalty consisting of:
- (2%) of the unpaid tax is due immediately once the payment of Payable Tax is late;

- (4%) is due on the seventh day following the deadline for payment, on the amount of tax which is still unpaid.

- (1%) daily penalty charged on any amount that is still unpaid one calendar month following the deadline for payment with upper ceiling of (300%).
15 A Person not accounting for any tax that may be due on import of goods as required under the Tax Law. (50%) of unpaid or undeclared tax.
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Travel Guide
Penang Travel Guide
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Travel Guide

One of the most happening states of Malaysia, Penang is divided into two parts- the Penang city with George Town as its capital and the Penang island. The state observes a diverse, cosmopolitan, and exciting culture, loved by tourists coming from all across the globe. From the city charm of George Town to the natural escape in the dense lush greenery, Penang is a wholesome experience for the travelers.
Abbreviated as RM, Penang being a part of the Malaysian country has the same currency known as Ringgit. It is further divided into 100 sen (cents). 1 Ringgits equals 0.24 US dollars. The flourishing economy of the state of Penang is termed as the "Silicon Valley of the East" and is the third-largest economy in the Malaysian country. The state also has the highest per capita income in all of Malaysia.
A battle ground and sufferer from both the world wars, Penang faced various setbacks in the history. The state was further ruled by the British for a long period before finally becoming a part of the independent Federation of Malaya in the year 1948. Since then Penang state rose to heights through its hardworking people who helped developing its economy. However, George Town was given the status of the city only in 2015.
  • Penang has the highest population density in Malaysia with ethnic Chinese population as a majority. 
  • The city of George Town is declared by UNESCO as a heritage site, so if you’re an art and history lover, there’s a lot to see here.
  • The state of Penang is known as the ‘Food paradise of Malaysia’. Yes, you will find numerous cuisines, and amazing Chinese flavors to pamper your taste buds.
  • The name Penang is derived from the world Pinang meaning betel nut tree. It was earlier renamed as Prince of Wales Island in 1786, but was later changed to Penang.
Similar to the other places in Malaysia, Penang too has a tropical rainforest climate. The sea and wind system pretty much dominates the climatic conditions in the state. It is warm and humid all-round the year but the summers are pleasantly bearable.
Penang has an international airport that observes flights from many countries of the world. Tourists can come from Kuala Lumpur as well. There’s a ferry connection from Butterworth to Penang city too. Reaching Penang by road has also become easier as the Penang bridge is now operational.
To enter Malaysia, tourists do not require any visa and therefore, if you’re travelling to Penang after embarking in Malaysia, all you need are your travel documents like the passport and immigration papers. If you are coming directly from your home country, then the requirement of the documents will vary depending upon the citizenship.

Penang is a part of Malaysia, a country with abundance of beauty and lush greenery. Nature is specially blessed with happiness here, and therefore, there are a lot of places to see around Penang.

Langkawi (108kms)- The Langkawi islands is blessed with unbelievable natural beauty of limestone cliffs, emerald green waters, and hidden shores. It is a must visit place, especially when it is so close to Penang.

Kuala Lumpur (353kms)- The capital city of Malaysia is visited by millions of tourists every year. The city is full of cultural and modern attractions and a mix of many interesting places.

Pangkor islands (193kms)- The island of Pangkor is flooded with tourists throughout the year. Blessed with immense natural beauty, nightlife, parties and excitement; the island is loved by party hungry tourists. 

Penang is known as the Food paradise of Malaysia. Do we need to say more? A world of hawkers selling sumptuous street food, the entire George Town island is lit up with food stalls every night. Specially on weekends, it’s like a food fest on the streets of Penang.

Art, theatre, nightlife and parties are in abundance in Penang. During the tourist’s season, something or the other is always running in the island and tourists love to enjoy it. While you’re there, Rayna travels will help you stay informed on every happening event in the city, and if you want, we’ll help you be a part of it too.

Penang has a host of nightlife spots for the tourists to enjoy drink, dance and have all kinds of fun. Slippery Senoritas, Bora Bora, and Brettos Wine Club are some of the popular joints of the George Town city.

Penang offers great souvenir shopping experiences through its small street markets. For some high end shopping experience, tourists can enjoy the Straits Quay Marina Mall, Penang Times Square and Gurney Plaza are some of the great hangout and shopping places.

  • George Town
  • Butterworth
  • Batu Ferringhi
  • Balik Pulau
  • Penang National Park
  • Penang bridge
  • Kek lok Si temple
  • Bukit Metrajam
Rayna tours brings to you the best of Penang city and its islandic beauty through its exclusively designed packages that not only ensure you enjoy Penang like a local but also take care of your comfort and luxury.
Penang also has a typical Malaysian Tropical rainforest climate. With an average rainfall of 2670mm, Penang does not face any heavy monsoon problems but the climate becomes dry during the months of December to February.

Best Selling Penang Tours

  • Penang Night Tour
  • Penang Grand Tour
  • Penang Bird Park
  • Penang Hill and Kek Lok Si Temple Tour
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