Proposed Tourist VAT Refund Scheme in UAE
The UAE VAT Law is provisioned to allow all tourists to claim the VAT paid on their purchases as a refund. While the UAE VAT Law is already provisioned to allow a refund, the scheme is yet to be introduced in UAE. According to the latest public clarification by FTA, an electronic system to return the VAT paid by the tourist has been planned. It is believed that the proposed plan to handle the tourist refund will enhance the UAE’s status as a premier global tourist destination.
In this article, we will understand the proposed plan of how tourist will get a VAT refund in UAE?
The proposed electronic system of tourist VAT refund is expected to be an advanced integrated digital system having a direct connection with points of sale, as well as with all UAE ports of entry. The designated spaces will be provided where tourists can easily reclaim taxes. The digital system will be designed to determine the taxes that are eligible for a refund and then reimburse it to the tourists.
It is expected that the system will be run by the global operator who will coordinate with the retailers registered with FTA which enable tourists to submit refund requests for their purchases. The retailers who would meet the requirements set by the FTA are free registered and they would be supplied with the necessary technology to connect with FTA as well as with airports, and land and sea ports of entry.
If a tourist chooses to make a purchase with the intention of applying for a refund of the tax from a supplier registered for tax refund system, then the supplier must provide them with the necessary documents to do so, most notably a tax invoice that meets all legal requirements. The tourist then submits the claim with the system operator directly and obtains the refund from the operator where sufficient evidential documentation has been provided
With the above understanding, the tourist VAT refund cycle will be something similar to the below:
- Tourist purchases from a supplier registered for tax refund system
- Obtain a Tax invoice from the registered supplier.
- In all the exit point, let say from Airport, you will have designated space to claim the VAT refund. For example, Tourist Refund Kiosk which accepts the refund request along with the required documents like Tax invoice, passport etc.
- On successful verification and acceptance, either refund will be credited to your Bank or it will be paid in cash.
While the proposed electronic system of tourist VAT refund is expected to be in line with global standards ensuring the simplest way to claiming VAT refund, there are certain conditions for a tourist to be eligible for claiming the VAT refund. The conditions to be eligible for the tourist refund scheme in UAE are:
- The overseas tourist should be in UAE during the purchase of the goods from the supplier
- The overseas tourist intends to depart from UAE within 90 days from the date of purchase of the goods, accompanied by the goods
- The goods are exported by the overseas tourist to a place outside the GCC VAT implementing States within 3 months from the date of supply