UAE says tourists can reclaim VAT from November 18

The UAE’s Federal Tax Authority (FTA) has announced that tourists can request refunds of the Value Added Tax (VAT) incurred on their purchases from November 18.

The country’s Tax Refund for Tourists scheme – announced by the UAE cabinet earlier this year – will take effect in phases from next month, a statement said.

The first phase will see the digital system of the scheme implemented at Abu Dhabi, Dubai and Sharjah International airports.

As of mid-December, the system will be fully operational to include all airports and land and sea ports in the UAE, the FTA added.

The UAE introduced 5 per cent VAT on several goods and services from January 1, 2018. It has since announced exemptions for certain sectors and services.

Read more: UAE Cabinet approves VAT refund for tourists

The tourist refund scheme is applied once visitors leave the UAE, where they will receive their refunds through a special device at the departure port.

They need to submit the tax invoices for their purchases from registered outlets, along with copies of their passport and credit card.

Once these documents are submitted, tourists can either recover the VAT in cash in UAE dirhams, or have it transferred to their credit card.

Also read: Here’s how the UAE’s VAT refund system for tourists will work

More than 4,000 retail outlets across the UAE will be connected electronically to the system, confirmed FTA director general Khalid Ali Al Bustani.

However, only the invoices issued by retail outlets registered in the scheme and connected to the system are eligible for a refund.

These eligible outlets can be identified with posters displayed on their storefronts.

All tax invoices issued by these outlets from November 18, 2018, will qualify tourists for a VAT refund, the FTA said.

“The electronic Tax Refund for Tourists scheme, which is implemented by the FTA in collaboration with Planet, the global operator of the system, is currently being finalised,” said Al Bustani.

He stressed that the scheme will be “fully operational” as per the timeline and will include integrated electronic programmes and mechanisms for direct connection between retailers and tax refund offices for tourists at airports and land and sea ports.

Extensive meetings were held with representatives of retail companies, outlets and shops in all seven emirates to familiarise them with the conditions and steps of registration in the digital system of the scheme.

“Over the last period, there has been a significant increase in the number of agreements signed with retailers to register in the digital system of the scheme. The exact refundable taxes are identified, and the payments are received through the electronic system,” added Al Bustani.

The FTA also intends to continue holding ongoing meetings during the next phase to add more retail companies into the new system.

The scheme is hoped to boost the tourism sector, the authority added.

WHO IS ELIGIBLE?

The FTA noted that the cabinet decision has outlined a “clear set of standards for transparency and accuracy” in the procedures to refund VAT to tourists visiting the UAE.

A set of basic conditions will determine whether the tourist is eligible for tax refund through the system. These include –

* The purchases in question must be subject to the Tax Refund for Tourists scheme

* The supplies are bought in the UAE by a tourist coming from abroad

* The tourist has the explicit intention at the date of purchase to leave the country within 90 days

* The tourist takes with him/her the purchases within three months from the date of purchase

* All the purchases are made from outlets registered in the system

If tourists express their desire to these registered retailers to make purchases with tax refunds, the concerned retailers must submit the required documents to claim the tax refund through the scheme as specified by the FTA, including tax invoices that meet all the legal requirements.

Tourists must then apply for a refund of the tax directly from the operator and provide sufficient and convincing evidence, the FTA added.