VAT Q&A: Should I pay VAT on a health club membership I paid for last year?

The Dubai reader was asked earlier this month to pay the tax for the 2018 portion of her membership

VAT expert Lisa Martin says the reader should not pay VAT if a membership contract was concluded last year. Brendan McDermid / Reuters
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I pay for my health club annually and renewed my membership in October 2017. On my first visit to the club in January they asked me to pay 5 per cent VAT on three quarters of the annual fee I paid in October. They said this was for the 2018 part and because of the new VAT laws they had to pay VAT on this and would be charging it to me. This seems unfair, is this correct and do I have to pay? JP, Dubai

This is not only an issue for health clubs but is relevant for any payment made in 2017 for services that fall partly in 2017 and partly in 2018.    The same question is being asked about children’s after school activities and motor insurance policies that span both years.

Even though you paid in October 2017, three quarters of that payment relates to your membership in 2018, which does fall under the new VAT legislation.  For VAT, the time of the supply is more important than when the payment was actually made.

What the law says is that if a contract was concluded before the new VAT law came into force on January 1, regarding a supply made after January 1, the amount paid is considered to be inclusive of VAT.

As you are a non-VAT registered consumer, the health club is not entitled to ask you for an additional retrospective payment to cover the VAT. An exception would be if it was agreed in writing at the time you entered the contract in October 2017 that you would be responsible for paying the VAT on the 2018 portion.

If they ask you to pay and refuse entry until you do so, I suggest you point them to Article 80, clause 2 of the Decree Law covering transitional provisions.  If this doesn’t resolve it you have little choice but to make a complaint to the the Dubai Economic Department's consumer rights divisionwho can be contacted by email at or by phone on +971 600 545555.

Anyone who has already paid the additional VAT in error, should ask for it to be refunded.

The health club is correct in saying that they have to account for and pay VAT on the portion of your annual fee that is attributable to 2018, but because they cannot charge this onto you, it becomes a cost to them.


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We are an SME business and applied for our Tax Registration Number (TRN) last year.  We supplied and uploaded all the information requested and received an acknowledgement that our request was accepted. The law states that it is our legal right to receive a VAT number within 20 business days. We have not received a number and have emailed the FTA numerous times and their reply is we will receive our number within 20 business days. We are ready to comply with the new law but with no VAT number we will not be able to issue invoices or order supplies as the suppliers require a VAT number as well and risk a Dh20,000 for non compliance.  Updating accounting systems with VAT numbers takes time. How long does it take the FTA to issue the numbers? SF, Dubai 

This is a very topical question and covers an issue that many companies are facing. The FTA was overwhelmed with the number of companies that registered for VAT by the December 4 deadline and it is evident that they have not been able to issue every TRN within the 20 working days they committed to. What they have done, which in my opinion is a prudent measure, is to issue companies with a provisional TRN number while they work through the detailed checking of each VAT registration application. This means that you may have a valid TRN number that you can use to charge and recover VAT, but you do not yet have the VAT certificate or notification about your VAT reporting quarter.

If you do not even have a provisional TRN number, you are not obligated or entitled to charge VAT. However, Article 56 of the VAT legislation allows, under certain circumstances, that you can reclaim any input tax that you have been charged up to five years prior to your registration on your first VAT return after registration. This important clause means that you will not have to bear the 5 per cent VAT that you have been charged pre registration as an additional cost to your business. There are some specific restrictions to claiming input VAT paid before registration, so anyone wanting to take advantage of this clause should read the details carefully or seek professional guidance if they are unsure.

Lisa Martin, a chartered accountant with over 20 years commercial finance experience, is the founder of accounting, auditing and VAT consultancy, The Counting House. Email any VAT queries to