Dubai's status as star venue in jeopardy from red tape and taxes

Abu Dhabi and Doha benefit as promoters struggle with the emirate's prolonged approval process and 10 per cent levy on sales

Nickleback performed at Dubai's Festival City last night.
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DUBAI // It was once the region's entertainment capital, but concert promoters here say bureaucracy, combined with a crippling tax on ticket sales, is making it financially impossible to put on big shows in the emirate. Dubai, once known for attracting stars including Robbie Williams, Akon and Carlos Santana, has recently had to look on as Abu Dhabi and Doha have lured the major acts.

Thomas Ovesen, the head of the promoter AEG Middle East, said: "Dubai has seen a change towards a prolonged [approval] process and local authorities are now eager to further police event permissions, by not allowing organisers to announce an event until all the permissions have been issued. "This will, of course, drastically reduce the number of events promoted, as it can be quite a lengthy affair to get permissions, which again, is lost time in which the event could have been announced and promoted, generating the required awareness and ultimately attendance."

Two 20,000-plus capacity shows planned for the emirate had been cancelled because of the difficulty of processing permissions and visas for the often enormous entourages that accompanied large acts, Mr Ovesen said. The crew is often not hired until shortly before a performance. However, Dubai insists on having a copy of each person's passport and making criminal record checks before it will issue visas.

This means that, while a tour can be announced and tickets sold for other markets, in Dubai a concert cannot be announced until the visa applications have been processed by the Department of Tourism and Commerce Marketing (DTCM). This can take up to 30 days. Promoters blame the delay for the recent failure to get several events off the ground. "Following the event permission rules can cause significant delays to announcements and eventually ticket sales, and in some cases such a delay cannot be justified, hence the tour will not play here," Mr Ovesen said.

While the DTCM says the delay is the responsibility of Dubai Municipality, the municipality says it is the responsibility of the DTCM. The emirate's promoters all agree, however, that the DTCM, which hand stamps each ticket to show that the tax has been paid, is responsible for hold-ups. On top of the approval, promoters have to pay a 10 per cent tax to the DTCM on the value of tickets before they can be sold, a levy not made in Abu Dhabi or other countries. Mr Ovesen said this was a huge financial disadvantag as the 10 per cent "affects the bottom line much more than you can imagine."

As artists took a share of ticket revenues, ultimately, they earn more elsewhere and the tax jeopardises their earning power in Dubai, he said. Jackie Wartanian, of CSM Entertainment Dubai, who brought the Desert Rock festival to the emirate, said there was "no justification" for the ticket tax. A further problem is that the tax is not refunded if tickets are not sold. "You pre-pay your taxes on printed tickets for your event sales," Ms Wartanian said. "Even if your event does not make a profit you have still paid taxes. In the rest of the world, you pay taxes on profits made, not when there are losses."

Audiences were not big enough to cover the costs, especially as sponsorship deals were harder to come by because of the economic crisis, she said. There have been some successes, however. The Backstreet Boys recently took to the stage in Media City and Nickelback performed last night at Festival City as part of the Dubai Bike Week, which will see Status Quo take to the stage tonight. On Thursday, it was announced that Sting would perform next month at the International Racing Carnival.

Mr Ovesen said the importance to tourism of events such as these must not be overlooked. "Our industry is very much an integral part of any hospitality business and would be a major asset and value in the city's attempt to attract the most visitors and guests," he said. "Think about the money guests spent when travelling to Dubai to see Kylie Minogue or the Backstreet Boys. It represents great spending in our malls, hotels and restaurants."

With a more proactive permission process, he believed, more events would take place. That could eventually lead to more impromptu performances being allowed and help the development of the local music industry. Mr Ovesen said that with "the objective of keeping the status of the most visited city in the region, the entertainment industry has got a lot to offer", with a variety of private companies doing their best to provide world-class entertainment.

He contrasted that with Abu Dhabi, where concerts run by Flash - which brought The Killers and Rihanna to the capital last year - are all supported by the Government. "Concerts are equally as important as the Rugby Sevens, the golf and the tennis," Mr Ovesen said. "It's all great exposure for the city yet they [the other events] have the tax waived." Tom Miles, the general manager of Dubai Festival City, said increasing competition with Abu Dhabi was making it harder for the emirate's promoters and venues.

"The number of concerts we've lost to Abu Dhabi in the past 12 months has been alarming," he said. "We lost George Michael, Coldplay, Shakira." When finances were the deciding factor, he said, Abu Dhabi "wins hands down".