Accounting for a business that is paid before the guest arrives and long after they leave
Hotels, hotel apartments, holiday homes and tour operators — deposits taxed in the month they land, levies kept out of revenue, and a cash plan for a year that earns most of its money in seven months.
- Deposit and city ledgers reconciled
- Tourism Dirham kept out of revenue
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Three things that break a hotel’s books
Not general accounting with a few room nights added. These are the places hotels, holiday-home operators and tour companies actually lose money and fail reviews.
Money that arrives before the stay
A non-refundable deposit taken in February for an April stay belongs in April’s revenue and February’s VAT return. Two different months — and most books only have room for one of them.
Levies you collect but do not own
Tourism Dirham, municipality and tourism fees, the service charge: they sit on your invoice and belong to someone else. Post them as sales and your turnover and margins are overstated, and the levy reconciliation never agrees.
A year with two speeds
Winter fills the rooms; summer still pays the salaries. A business that earns most of its cash in seven months needs a plan for the other five — made in October, not discovered in July.
Where a AED 4,200 stay sits before it becomes cash
A guest books three nights in March, pays a deposit in February, and their company settles the rest in May. The money passes through three ledgers — and VAT is due at two moments that match none of them.
Advance deposits
FebruaryAED1,200
A non-refundable deposit is taken when the booking is made. Nothing has been delivered yet, so it is not revenue — it is a liability until the guest arrives.
VAT due now. A payment for the stay is taxed when it is received — in February’s period, not March’s.
Guest ledger
March, in houseAED4,200
At check-in the deposit moves across. Each night’s audit posts the room, and the restaurant and spa charges land on the same folio as they happen.
Revenue is earned night by night. No new tax point until the bill is issued.
City ledger
CheckoutAED3,000
The balance is billed to the guest’s company on account. It is a receivable now — and the company’s terms are sixty days.
VAT due on the invoice date. It falls in March’s period, whenever the company pays.
Date of supply for a service is the earliest of three things: the service being done, the payment arriving, or the invoice being issued. So the deposit is taxed on receipt and the account on its invoice — and on a company account you pay the VAT before you have the cash. A refundable security deposit is different: it is not payment for anything until it is applied.
“In a hotel the money, the guest and the invoice all arrive in different months. Good books know which month each one belongs to.”
Ripple Accounting · DubaiSeven months pay for twelve
Revenue rises and falls with the season. Salaries, rent and service contracts do not. The green months have to carry the gold ones — which only works if someone has counted how much they need to carry.
- Revenue above fixed costs — 7 months
- Revenue below fixed costs — 5 months
- Salaries, rent and contracts
The profit and loss for the year can look perfectly healthy while May to September each run at a loss. The question is not whether the year works — it is how much cash has to be put aside in the green months to get through the gold ones, and whether the deposits taken in spring are being spent before the guests arrive.
An illustrative year, not a forecast for any property. The shape is what matters: a high season that carries a low one.
From the night audit to the filed return
Property system to ledger
Room, food and beverage and other revenue from your property management system reconciled to the general ledger every month, so the two never tell different stories.
Deposits, guest and city ledgers
Advance deposits held as liabilities until arrival, in-house balances agreed, and company accounts chased against their terms rather than discovered at year end.
Tourism Dirham and other levies
Collected levies kept in their own accounts and reconciled to what was remitted, so they never inflate revenue and never drift away from the authority’s figure.
Service charge and payroll
Service charge collected and paid out to staff on a written basis, recorded so that what came in and what went out can be shown line by line.
A cash plan for the low season
A rolling forecast built from bookings on hand and last year’s shape, so the summer gap is a number you planned for in October rather than a surprise in July.
VAT and Corporate Tax
Deposits taxed in the right period, complimentary stays assessed, returns filed inside the 28-day window, and Corporate Tax at 9% above AED 375,000 on records that stand up to a question.
Four steps, then it runs
Property and ledger review
We look at how your system posts revenue, how deposits and company accounts are held, and where levies end up today.
Set the posting rules
One written method for deposits, levies, service charge and complimentary stays, so every month is treated the same way.
Monthly close against the system
The ledger agreed to the property system’s reports, the three ledgers reconciled, and the levies matched to what was paid over.
Returns and the cash plan
VAT filed inside the 28-day window, and a forecast that shows what the next low season will need.
Common questions from UAE hotels and operators
Do we charge VAT on a deposit when the guest has not arrived yet?+
Yes, if the deposit is a payment for the stay. For a service, the date of supply is the earliest of the service being completed, the payment being received, or the tax invoice being issued — so a booking deposit is taxed in the period you receive it, even though it only becomes revenue when the guest stays. A refundable security deposit held against damage is different: it is not payment for anything until it is applied to a charge.
Is the Tourism Dirham our revenue?+
No. In Dubai it is charged per room per night — AED 20, 15, 10 or 7 for five-, four-, three- and one-to-two-star hotels, and AED 15 or 10 for deluxe and standard holiday homes — for the first 30 consecutive nights of a stay, and it is collected for the Department of Economy and Tourism. It belongs in its own account until it is paid over. Other emirates run their own fees: in Abu Dhabi, since 1 September 2023, the guest tourism fee is 4% and the 4% municipality fee continues.
Are hotel apartments and holiday homes exempt like residential rent?+
No. Hotel rooms, hotel apartments, serviced apartments and holiday homes are standard-rated at 5% whatever the length of the stay. The exemption is for residential leases. Services such as room cleaning, laundry and catering are what point a property towards serviced accommodation, and the FTA has published a clarification on exactly where that line falls.
We give free nights to partners and influencers. Is there any VAT on that?+
There can be. A complimentary stay can be a deemed supply for VAT, and where it is, it is valued by reference to what it cost you rather than the published room rate. Keep a register of every complimentary night — who, why and what it cost — so the decision is made on facts at the return, not reconstructed at an audit.
When does a hotel or tour operator have to register for VAT?+
Registration is mandatory once taxable supplies pass AED 375,000 in the previous twelve months, and voluntary from AED 187,500. Count your own supplies only — levies collected for an authority are not yours. Corporate Tax applies at 9% on taxable income above AED 375,000.
Talk to someone who has read a night audit before
Thirty minutes, a look at how your deposits, ledgers and levies are recorded, and an honest view of what is missing.
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