UAE tourists can now claim VAT refund

Tourists will receive 85 per cent of the total VAT amount paid

As of November 18, tourists in the UAE have been able to claim tax refunds on their purchases, at Abu Dhabi, Dubai and Sharjah International Airports. The UAE Federal Tax Authority (FTA) introduced a value-added tax (VAT) of 5 per cent in January 2018.

Phase two of the Tax Refunds for Tourists Scheme, which goes into effect on December 16 this year, will allow overseas tourists to claim refunds of taxes at all other UAE airports and land and sea ports that are taking part, including Al Maktoum International Airport and Port Rashid.

Tourists are to receive 85 per cent of the total VAT amount paid, minus a fee of Dh4.80 ($1.30) per Tax Free tag. There is also a minimum spend to qualify for tax free purchases at Dh250 ($68).

Currently, 4,500 retail stores are participating the refund scheme, with the number expected to rise once the second phase comes into operation. The company hired to operate the system, Planet, has reportedly completed all necessary tests to ensure the system runs efficiently.

Federal Tax Authority (FTA) director general Khalid Ali Al Bustani says that the scheme’s digital system is the most advanced of its kind, and that the UAE is one of the first countries to implement it. "The FTA is keen to contribute to increasing tourism attractiveness, encouraging domestic trade and establishing the country as a central trading hub in the region. Among the incentives offered by the new system is the refund of VAT on purchases of up to Dh10,000 ($2,723) in cash for every overseas tourist within every 24 hours, which is high compared to the values allowed to be refunded in cash in many countries of the world, while there is no maximum cap where amounts due for refund are paid to the tourist's credit card.

Only invoices issued by retailers who are registered for the scheme and connected to the system are eligible for a refund by tourists, and these retailers can be identified by posters they should display clearly on their storefronts.

Goods that have been consumed, fully or partly, in the UAE or any implementing state will not qualify for VAT refunds, and neither will motor vehicles, boats and aircraft or even goods that are not accompanied by the tourist at the time of leaving the Emirates.

To qualify for a tax refund, the tourist needs to be at least 18 years old, should not be UAE residents but can be GCC nationals.