Dubai: There is confusion in the service industry about the legality of imposing a service tax on customers, with some operators claiming they are kept in the dark about guidelines.
While some restaurants and hotels said they were surprised by the media reports that service charges are against the existing law, others admitted that they knew it was illegal, but they have been following the practice because there are no clear guidelines.
A manager at the Crowne Plaze Hotel, who did not wish to be named, said the Consumer Protection Law Number 26 for 2006 does not clearly state anything about service charges.
Clarification
"After we saw the newspaper stories, we contacted the municipality and the Economic Department for clarification, and they sent us a copy of the 2006 law. But there is nothing in that which states that we are not supposed to take service charges," he said.
He added they did not think that they were flouting any law because the government had not laid down any clear guidelines on the issue. "As soon as we receive a notification from the authorities banning service charges or specifying the percentage we can charge, we will definitely abide by those regulations," he said.
The Dubai Department of Economic Development has said it is awaiting a bylaw to implement the Consumer Protection Law that prohibits restaurants from charging customers an additional service fee. The department has clarified that it will take action against those outlets that do not comply.
Essam Khalifa, restaurant manager of TGI Fridays on Shaikh Zayed Road, said they did not know the service charge was illegal and that the government had sprung a surprise by stating that it was.
"It has been there all these years. We do not understand why suddenly they made it illegal before this new year. So far we have not received any intimation from the government. The management will issue us instructions as soon as they receive directions from the authorities," said Khalifa. Some restaurants and cafes like Chop Chop and Art Cafe in the Mall of the Emirates and Japengo in Jumeirah said although they know charging a service fee is illegal, they will wait for the Economic Department to issue specific instructions.
"The issue is still in talks. As long as we do not get specific instructions, we will continue to charge. But if any customer insists on not paying the service charge, I will have to deduct it from my staff's tip because I cannot override the company's policies," said John De Vera, restaurant manager at Chop Chop.
Many residents who spoke to Gulf News maintained that they did not mind tipping the waiter for good service instead of coughing up a compulsory service charge.
Walid Ahmad, a trader from Dubai, said: "I prefer to give a tip because I know it is going to the person who served me. I think it will also help in improving the quality of service at the restaurants."
However, it seems outlets across Dubai follow an independent policy regarding the distribution of the service charge among their staff.
"We get only 20 per cent of the service charge. The rest goes to the company," said an employee at the Art Cafe.
