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Well Mr BB and I had to go to DIFC today where his dentist is located at Gate City. They had changed the appointment to about 1-1/2 hours later. As I had fixed him breakfast and planned on having mine while he was having the dental work done, we decided I would have a bite to eat and he would have a coffee.

The cafe we had gone to had perfumes and lotions for sale - quite lovely so I picked up a few.

When the bill came I almost fell off the chair as there was an additional charge of over 100 AED for a DIFC tax!!! I thought it was a free-zone???

Then I spotted some furniture - couch and 2 chairs that I fell in love with. To buy it would incur an additional tax charge of over 4,000AED on the total purchase!!! WTH??? The salesman said there would be a "discount". Even with a 10,000AED discount we would still have incurred over 3,000 in tax.

Don't see me eating there ever again. Reminds me to ask Mr BB if he got taxed on his dental work.

Well that is truly amazing! I'm absolutely flabbergasted that DIFC have imposed, what amounts to a purchase or value added tax.

Do you know anything more about it Bora, when was it introduced, does it state on the invoice what the tax is for and what percentage rate the tax is?

Indirect taxation by the licenses, government fees and permits everyone is subject to in Dubai is one thing, but a direct tax on goods and services is a first in the UAE as far as I know and is a dangerous precedent should other free zones attempt to follow suit.

There has been talk for a few Years now of abolishing the 5% import duty paid by importers, on imported goods and replacing it with the European model of VAT on all goods and services sold in the UAE, the authorities claim that the consumer will not notice any cost implications as the replacement VAT will not be any higher than the Abolished 5% import duty, but I’m sure we’ve all heard that one before.

I wonder if DIFC have simply imposed their own VAT as an additional revenue stream, let’s face it, they never provide reasons for their decisions even when they know what they are themselves, I would imagine VW would have some background on this issue, has anyone seen him lately?

The cafe was in the "City Gate" area (where The Capital Club is). It's a DIFC municipality tax, 10% of the total purchase. My breakfast alone - juice, choice of meal, coffee was 62AED, plus 6.20 tax, then on top of that a tip. Expensive breakfast!!!! Thank goodness Mr BB ate at home.

Normally, in the free zones, an annual community service charge is levied by the governing authority on all the owners of properties within that community, the service charge covers the expenses incurred by the relevant authority for services provided from infrastructure investment and maintenance to common area landscape irrigation. The owners of the properties recover this service fee either as a separate cost or it’s built into the rental of their lets, owners who occupy their own buildings are liable to meet the expense directly.

So why do DIFC collect a 10% DIFC municipality tax from an end user?

A municipality is a town or district that’s controlled by a local government entity, which DIFC is, it’s wholly owned by the Government of Dubai and the title ‘DIFC Municipality Tax’ indicates to me that DIFC are subsidising their service fee by imposing this tax on the consumer, unfair to say the least, it’s the owners who benefit from the free zone and the end user who is paying for that benefit after already contributing to the Dubai municipality housing fee and the community service charges imposed if the end user is living in one of the free zone communities in Dubai.

There is already duplication in the community service charges imposed by the free zone communities in Dubai and the DM housing fee, the Government of Dubai aren’t keen on resolving this issue, because at the end of the day, they’re getting paid twice for providing services such as street lighting, street cleaning, infrastructure maintenance, waste collection, sewage treatment, the list goes on, and now to add insult to injury, DIFC appear to be charging their customers an additional 10% on purchases for what, what added value do DIFC provide for that 10% surcharge? sad, sad day.

It's a bit flippin' cheeky really isn't it. But I guess we all get taxed one way or another here regardless.

Bora Bora wrote:The cafe was in the "City Gate" area (where The Capital Club is). It's a DIFC municipality tax, 10% of the total purchase. My breakfast alone - juice, choice of meal, coffee was 62AED, plus 6.20 tax, then on top of that a tip. Expensive breakfast!!!! Thank goodness Mr BB ate at home.

And they are also charging the same tax for other purchases in the area, well not me, I wouldn't be visiting thats for sure.

Every shop charges the 10% tax. I don't know if it applies on to "The Gate" - if it's a separate from the office buildings. I used to work in Office Building 5 and I don't recall a tax being slapped on at any of the cafes. Although I must admit I really didn't look closely at the checks. Seems I'm doing that everywhere I go - checking receipts!!!

Bora Bora wrote:Every shop charges the 10% tax. I don't know if it applies on to "The Gate" - if it's a separate from the office buildings. I used to work in Office Building 5 and I don't recall a tax being slapped on at any of the cafes. Although I must admit I really didn't look closely at the checks. Seems I'm doing that everywhere I go - checking receipts!!!

I am really shocked at this, but hey anythings goes right.