I run a restaurant — does VAT apply to the service charge and to tips?

Food and beverages sold in restaurants and cafés carry the standard 5% VAT rate, with no special carve-out the way some other goods get. Any mandatory service charge printed on the menu or added to the bill — one the customer has no real choice about — carries that same 5%, treated as part of the overall consideration for the service, not as a separate item outside the tax.

A genuinely voluntary tip that the customer chooses to give, and that gets passed through directly to staff rather than treated as part of the meal or service price, can fall outside VAT scope — but only if your billing and payroll systems actually keep it separate from the restaurant's own account, not just labelled "tip" on paper while functioning as an automatic add-on. A common mistake is bundling the tip into the same tax invoice and assuming it's automatically exempt. RASEEKH reviews your billing setup so the taxable and non-taxable pieces are actually kept apart.