In November 2018, the UAE VAT Refund Scheme for Tourists was implemented for a tax-free shopping. This was announced months following the introduction of five percent VAT in January of 2018.
Under the Cabinet Decision (No 41) of 2018 on Tax Refunds for Tourists and the Federal Tax Authority Decision (No 2) of 2018, any natural person that isn’t a resident in an implementing state and isn’t a crew member on any aircraft or flight leaving a VAT-implementing state is eligible for processing a tourist VAT refund. GCC nationals are considered eligible according to the current tax regulations provided they aren’t from an implementing state.
What goods can tourists process for VAT refunds in UAE?
All goods which have the indirect tax, VAT, applied can be processed by tourists for VAT refunds in UAE at civil airports, land airports, and seaports, except the following:
- Goods which have been fully or partly consumed in UAE or an implementing state
- All motor vehicles including aircraft and boats
- Goods which aren’t accompanied by an overseas tourist during the time of departure from the UAE
What are the requirements to process tourist VAT refund in UAE?
What is required during the time of validation for the tourist vat refund application are as follows:
- Sales receipt or tax invoice with a tax refund tag (minimum spend of Dhs 250)
- Travel document
- Boarding pass
- Purchased goods (the purchased goods must be presented to the validation desks prior to checking in the luggage)
Take note: you have to leave the country within six hours following the completion of the validation process for tourist tax refund in UAE. Failure in doing so can result to a refund being cancelled. However, you can still get the tax refund by restarting the tax refund validation process.
How much can tourists get as tax refund in UAE?
Tax savings can be significant, depending on the prices of goods purchased. At a five percent standard VAT rate, VAT refunds in UAE can look negligible. This is especially if you consider the fuss of having to look for VAT-registered retail stores, collecting the tax invoices, applying under the VAT refund scheme for tourists in UAE, and presenting the actual goods to the validation point.
A VAT refund for tourists in UAE can be meagre on small purchases. In such case, most think they aren’t worth the trouble at all. However, UAE is one of the major global destinations for luxury shopping. Tax savings, therefore, can become significant and are much appreciated.
The tax savings does not have to be from a single huge purchase. Tax accumulated from a tourist’s purchase of goods all throughout his/her stay in the country can be quite a handsome amount, making it worth a refund.
Is there a maximum limit for a tourist’s VAT refund in UAE?
Applicants are to submit tax invoices from purchases of goods with the tax-free tags or stickers. The tax invoices must be valid and issued by the retail outlets that are registered with the UAE Federal Tax Authority. No limit has been placed by the local tax authority on the amount which tourists can recover if the refund is sent to bank accounts. If the refund, however, is requested in cash form, then a limit of Dhs 10,000 has been set.
How can I apply for a tourist VAT refund in UAE at the exit points?
As mentioned earlier, a VAT refund claim for tourists can be completed electronically at airport and seaport departures. In order to claim a refund, a tourist must present a tax invoice that is from a registered store where goods were purchased. During the time of submitting a claim, a tourist must have a credit card, passport, and relevant tax invoice. The credit card will be for transferring the tax refund without cash handling.
There are also self-service kiosks for tourist VAT refunds in UAE in major hotels and malls across the country. The Federal Tax Authority expanded the network of VAT recovery kiosks to hotels and malls apart from the ones at UAE exit points. Planet is the authorized company by the tax authority to operate all the self-service kiosks and e-system for tax refunds for tourists in UAE.
With their advanced technology, the self-service kiosks allow tourists in fully processing requests for tax refunds in UAE for tourists. The entire process of getting a refund through a kiosk by Planet can be completed in just minutes. There is no longer the need to present the actual goods bought that are eligible for a tax refund. However, the documentary requirements are to be scanned in the kiosks.
Do you need more information with respect to the tax policies in UAE? Talk to VAT Registration UAE’s regulated tax agents in Dubai!