Details of VAT refunds for tourists in UAE revealed
Tourists can claim back 85 per cent of the VAT upon leaving the country
Tourists will be able to claim back 85 per cent their VAT on goods they have purchased in the UAE from Sunday, November 18.
The remaining 15 per cent will be charged in administration fees to Planet, the global operator of the refund system.
On Wednesday, UAE Federal Tax Authority director general Khalid Al Bustani said more than 4,500 companies have registered to the tourist tax refund scheme. He said the figure is expected to rise to 6,000 by the end of the year and could be as high as 10,000 by the end of next year.
“The FTA is keen to contribute to increasing tourism attractiveness, encouraging domestic trade and establishing the UAE as a central trading hub in the region,” Mr Al Bustani said.
Under the new scheme, tourists can claim a tax refund within 90 days of purchase. They can claim up to Dh10,000 in cash while there is no limit on credit card refunds.
“The Dh10,000 cash refund is high compared to what countries across the world offer,” said Mr Al Bustani.
To qualify for the refund, tourists must be at least 18 years old and must intend to leave the UAE within three months of purchase along with the goods they have bought.
VAT is introduced in the UAE this year as part of plans to diversify the country's economy away from oil.
Regulations stipulate that tourists will only be able to claim refunds on goods that have purchased from companies that have signed up to the scheme.
To be eligible for the scheme, companies must first undergo a credit assessment. The reason for this is because they will be the party required to refund the VAT to the UAE government.
Crew members on flights or planes that are leaving the country are not eligible for VAT refunds.
Goods not included under the refund include motor vehicles, boats or aircraft. Similarly, any goods that have been fully, or partly, consumed in the UAE cannot be refunded.
Tourists can apply for a tax free purchase in participating stores. Once the shop logs their information, and they have provided a valid passport to prove they are not a resident, they will be issued a tax free tag on the back of their receipt and a digital form will be created.
Tourists can then claim their tax refund at the point of exit. At the moment the only valid points of exit are Dubai, Abu Dhabi and Sharjah Airports.
However, this will be extended to include other ports and airports across the UAE next month.
There is a minimum spend of Dh250 for goods to be eligible for the scheme. There will also be a Dh4.50 charge for each tax free tag that is presented at the point of refund.
The 15 per cent of the transaction that is paid as commission to the tax refund agency, in this case Planet, is common practice in many countries with various agencies charging differing amounts.
Planet currently operates in 58 countries around the world.
Updated: November 14, 2018 05:11 PM