The UAE is a shopper’s paradise with its luxury outlets, glitzy malls, and gold souqs and luxury outlets. It offers the best brands from around the world, and tourists can take advantage of the shopping opportunities when they visit the country.
The UAE government’s decision to refund Value Added Tax (VAT) paid by tourists on their purchases is excellent news for the travel, tourism, and retail sectors. Keeping with the global practice of exempting tourist purchases from VAT, the Federal Tax Authority (FTA) implemented the VAT refund scheme for tourists starting November 18, 2018, after introducing VAT on January 1, 2018, in the UAE.
Steps to get a VAT refund for tourists in the UAE
The Federal Tax Authority (FTA) has announced that eligible tourists can request refunds of VAT incurred on their purchases in the UAE. Anybody who is not a resident of the UAE, including the GCC nationals, is eligible for Tax-Free shopping under the current rules.
Here are a few primary conditions and steps to get your VAT refund:
- The goods purchased by tourists need to be supplied within the UAE border.
- The tourist must leave the country within 90 days from the date of supply, along with the purchased supplies.
- The goods must be exported out of the UAE by the tourist within three months from the date of supply.
- The claim for a refund must be made within 90 days of purchase.
- The tourist must have purchased the goods from a registered retailer in the system.
- The minimum spending for VAT refund by the tourist is 250 Dirhams.
- The maximum limit for a cash refund is 7,000 Dirhams.
- The tourists will receive 85% of the total VAT amount paid in the refund, minus an administration fee of 4.8 Dirhams per tax-free form.
Any retailer who follows the authority’s specific criteria can participate in the scheme. The FTA has issued decision No. (1) specifying the requirements for retailers for participating in the Tourist VAT Refund Scheme.
How can you claim a VAT refund on your purchases as a tourist?
Follow the below steps to claim a VAT refund on your purchases as a tourist:
- Determine the conditions to fulfill: As a tourist, you must follow the primary requirements and steps given above in the article to get your VAT refund.
- Check the designated places for VAT refund: A tourist can avail the VAT refund on the tax paid for their shopping from various outlets and point of sales registered under the Tax Refund Scheme for tourists through an electronic system. It determines the taxes eligible for a refund and shall be paid accordingly.
- Don’t forget to get the tax-free tag: Once you have finished shopping as a tourist, a tax-free tag will be attached to your payment receipt. The tax-free tag is crucial as it allows the tourist to avail the refund scheme with a minimum purchase of AED 250. Remember, the tax-free tag is only valid for 90-days from the date of purchase.
- Validate your eligibility for VAT refund as a tourist: It is a mandatory process to avail the tourist refund scheme. The tourist has to provide the passport and boarding pass, and additional checks, if necessary, will be carried out to ensure your purchase.
- Pick a method of refund: There are two types of refunds in which you can avail tourist refund scheme, i.e., by cash or credit.
Vat Refund for tourists in UAE
The new amendment for VAT refund for tourists is fully electronic with minimal human intervention. It has led to an excellent customer experience for retailers and the FTA. The VAT refund scheme has various conditions and procedures for the retailers, the scheme operators, and the tourists. The refund scheme is an attractive scheme for tourists visiting UAE. It has been implemented to incentivize tourists to shop in UAE. It is outlined that tourists will be able to collect a refund of VAT at the time of departure from the airport.
As a tourist, it would be beneficial to have proper knowledge regarding the VAT refund scheme before visiting UAE. Contact the experts for the latest clarifications and judgments regarding the scheme.