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In most of the countries, a specialized incentive mechanism is put in place to minimize the overall cost of tourists with the objective of increasing the tourism in their country. UAE, especially Dubai, being one of the most sought after tourist destinations, the UAE VAT Executive Regulations are provisioned with ‘Tourist refund scheme’. In this article, we will discuss on tourist refund scheme and tax refund details to be furnished in VAT Return form 201.
Under this scheme, the VAT paid by the overseas tourist is refunded. However, the tax refund under the tourist refund scheme is subject to fulfilment of certain conditions.
Before discussing the applicable conditions for tourists’ refund, let us understand who is an overseas tourist.
For purpose of VAT in UAE, an overseas tourist means, any natural Person who is not a resident in any of the Implementing States and who is not a crew member on a flight or aircraft leaving an Implementing State.
For purpose of VAT in UAE, an overseas tourist means, any natural Person who is not a resident in any of the Implementing States and who is not a crew member on a flight or aircraft leaving an Implementing State.
In VAT Return form 201, a separate box ‘Tax Refunds provided to tourists under the tax refunds for Tourists Scheme’ is made available under ‘VAT on Sales and All other outputs’. This is applicable only for businesses who are registered and enrolled under the official tourists refund scheme:
As shown in the above image, you need to mention the value of any tax refunds provided to tourists under the tax refunds for tourists scheme and the amounts reported in this box should always be in negative. This will reduce your total output tax liability.
For businesses who are not registered and enrolled under official tourist refund scheme, the box 2 will not be applicable. In such case, you need to mention nil values (0) which are auto-populated.
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