The UAE havs transformed itself into a tourist spot. In the first half of 2018, Dubai itself has attracted more than 8.1 million tourists from every corner of the world. Visitors get fantasized with the tourist spots and are also driven by the craze of shopping in Dubai. As we all know, the Emirates are known for free zones and a free tax economy, the Emirati government has taken this to the next level where they have introduced VAT refund for the tourists. Let’s see why and how.
Visitors to the UAE
The Emirates has defined itself as a tourist destination and has outpaced other destinations at a faster pace. It attracts worldwide visitors that spend a huge amount on tourism. According to the Dubai Chamber of Commerce and Industry, the spending is expected to increase to 205.5 billion Dirhams by 2022. Since the tourism industry is booming, the Emirati government has taken an innovative step of refunding the VAT for the goods purchased. Why? Read below.
Visitors to the UAE Can Claim VAT Refund from Nov 18th 2018
The UAE Federal Tax Authority (FTA) has announced a tax refund schemes for tourists, wherein the tourist will possess the power to claim a VAT refund, if charged. According to the report, more than 4,000 retailers across the UAE will be connected with an electronic system to track the amount being charged from the visitors. The number is expected to rise by 6,000 by the end of this year, and by 10,000 by the end of next year. A maximum amount of Dh 10,000 could be claimed as cash return, whereas there exists no limit for the credit card. The implementation of this law can be seen at Abu Dhabi, Dubai, and Sharjah international airports, with an aim to cover all the airports by December 2018. The tourists will be able to claim back 85% VAT on their purchased goods.
Conditions for Retailers to Take Part in the Scheme
- The initial step is that the retailer must get registered with the Federal Tax Authority (FTA) for VAT and TRN registration
- The supplier’s sales of goods must not be excluded from the refund scheme, as determined by the authority
- The retailer needs to submit a request to participate in the Scheme as determined by FTA
- The retailer must meet the financial credit requirements specified by the system operator and should submit the tax returns and pay the due taxes regularly
The VAT Refund Electronic Process
While leaving UAE, the tourists will be able to claim for VAT Refund. The tax-free tag needs to be validated within 90 days of purchase. The entire process has been designed in an easy manner so as to avoid human intervention and can be completed in a quick and hassle-free way. All that needs to be done by the tourist is to submit the required documents and obtain a refund via credit card or in cash. The process goes as follows:
- Tourist heads to the airport
- Retailers register in the system
- Departure from the UAE (air, land or seaport)
- Present [passport + tax invoice + credit] at the Tourist Refund Office
- The tax shall be transferred to the account or paid in cash
In a nutshell, we can say that this strategy would fetch in more business investors. This innovative step by the Emirati government foresees its future relations with the global countries. Dubai has transformed itself into a tourist spot and this step would attract millions of worldwide visitors for shopping, especially for gold and jewelry. This would boost both the industries in the long run, which will simultaneously be a source of revenue for the development of the UAE’s economy.
To know more about the innovative step introduced by the government, you can contact us. We’d be happy to help you with any information.