The UAE is a federation of seven emirates, namely, Abu Dhabi, Dubai, Sharjah, Ajman, Fujairah, Ras al-Khaimah and Umm Al-Quwain.

The UAE Constitution distributes powers between the federal and national level. As a result, it must be noted that the laws can vary between the emirates, as each emirate can regulate within certain areas of law independently.

This Practice Note will discuss the application of the service tax, also called municipality fees, or tourism fees by a few of the emirates.

Service tax: Service tax is a tax levied by the municipal authorities on service providers on hotel services but is actually borne by the guests.

Municipality fee: The municipality fees are the taxes imposed on the sales of the hotel establishments.

DTCM: The Department of Tourism and Commerce Marketing of Dubai.

Department of Culture & Tourism: The Authority responsible for charging the municipality fee. It was formed from the union of the Abu Dhabi Tourism Authority and the Abu Dhabi Authority for Culture and Heritage.

Guest: A natural person staying at any hotel establishment in return for payment.