Wednesday, Aug 23, 2017

Dubai: Shisha, or hookah, a tobacco that one smokes through a water pipe, will not cost double in restaurants across Dubai despite being a tobacco product covered by the new tax, according to one expert familiar with the new regulations.

The Ministry of Finance announced on Tuesday that the 100 per cent tax on tobacco products and their derivatives would come into effect on October 1.

“The final price that a customer in a restaurant pays for shisha will not double. The restaurant will have to pay double the wholesale price for its supplies of tobacco, but the final price they sell it for will not double,” said Hassan Bayrakdar, managing director at RAQAM Consultancy, a company specialising in regulatory compliance.

Bayrakdar added that the price of shisha tobacco would, however, double in shops and supermarkets.

“In Carrefour, for example, the price of shisha tobacco will increase 100 per cent, but the price you pay in restaurants will not double,” he said.

A senior source at Al Fakher, one of the world’s largest manufacturers of shisha tobacco, confirmed that the 100 per cent tax would apply to flavoured tobacco, adding that there wasn’t much clarity about how it would be applied.

When the same tax was introduced in Saudi Arabia in July, a 100 per cent duty was added to shisha tobacco, effectively doubling its price, as it fell into the tobacco category.

Shisha, one of the Middle East’s most popular pastimes, is served in many restaurants, bars, and hotels across the region. The confusion, however, is around whether or not the shisha many people consume in these places will double in price for them.

Bayrakdar says that it will not.

“If a restaurant sells a shisha to its customer for Dh50, the new tax will not force them increase that to Dh100. The restaurant will simply have to pay more for its tobacco,” he said.

For example, if a restaurant buys its tobacco from the supplier for Dh5 per box, they will now pay the distributor Dh10 per box, because of the new 100 per cent tax.

Therefore, they might increase the price they charge their customers for shisha by Dh5, to Dh55, in order to keep making the same profit margin as before, or they might choose instead to absorb this cost themselves.

The Ministry of Finance could not be reached for comment.

by Ed Clowes Staff Reporter

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