A new VAT refund scheme for UAE tourists has been given the green light by the FTA
30 April 2018| Last updated on 14 January 2020
It was announced this week by the Federal Tax Authority (FTA) that a VAT refund scheme for UAE tourists has been approved.
Meaning, outlets and points of sales across the UAE will be connected to a new refund system.
Tourists in the UAE can expect the VAT refund system to function similarly to what's currently prevalent in Europe and Asia.
The FTA, in their fifth meeting, have also shared that over 281,000+ businesses have registered for VAT in the UAE, while another 637 have registered for excise tax.
Since the introduction of VAT in the UAE on January 1st, 2018, Dubai is competing with destinations like Hong Kong and Singapore when it comes to being a shopping haven for tourists. In fact, it has become slightly more expensive as expected.
Of course, with this new tax refund system, the city hopes to regain its status as a top shopping destination for tourists.
How UAE tourists can claim back VAT
Different tax refund systems currently work in different countries. For instance, European tourists can only receive their tax refund at the airport when leaving the country they are visiting.
Alternatively, in Japan, tourists can gain their VAT refund immediately at retail outlets while shopping - so long as they submit certain documents. These include items such as their passport, or their outward travel air ticket copies etc.
For UAE tourists, they can expect to see a blend of both systems used in these locations.
It is very likely that the UAE's VAT refund system will see the implementation of both an authorised point at airports, as well as some selected points outside the airport - like a money exchange, for instance - to receive the tax refund after documents are submitted.
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These are options the FTA are considering. After all, the last thing the UAE's airports need are more queues of people waiting... Especially with the huge amounts of tourists that visit the country every year.
Discussions are also in place regarding tourists being able to show their original passport to authorised retailers at the time of shopping, like in Japan. Plus, there are talks of registering each retailer as part of the tourist refund scheme.