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Saudi Arabia introduces new tax on hotels

Saudi Arabia introduces new tax on hotels

RIYADH: The new tax comes on top of the 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.