The Federal Tax Authority (FTA) has granted its consent for implementing a VAT refund scheme for tourists in the UAE. The Tourist Refund Scheme which will be start in November 2018. The refund of the VAT paid by these tourists during their time in the UAE will be made available through various points of sales and outlets throughout the country.
The FTA declare UAE’s Federal Tax Authority has appointed Planet as its exclusive tax refund operator for the Tourist Refund Scheme which will be rolled out in November 2018.
“We wish to invite you to an event organised by the FTA and their exclusive tax refund operator, Planet, who will be operating the Tourist Refund Scheme,” said the invite
The decision was taken during the fifth meeting of the FTA which was held this Wednesday. The authority also said that the number of VAT registered businesses has increased to 281,00 while stats for excise tax registration stand at 637, as per latest data.
“In Europe, you can get tax refund only at the airport when leaving the country. In Japan, tourists can get refunds immediately at retail outlets while shopping after submitting certain documents such as passport or outward travel air ticket copies, etc. In the UAE, it seems it will be a blend of what happens in Europe and Japan,” said Mayank Sawhney, managing director, MaxGrowth Consulting, explaining that .different countries have different tax refund systems in place.
The UAE is likely to enable specific outlets and money exchanges, most probably at airports and nearby areas, where foreign tourists can go and get a refund of taxes after producing required documents proving their entitlement to claim tourist refunds.
“So these are some of the options the FTA may be considering, because they will not want long queues of tourists at UAE airports waiting to get the refund, given the huge number of tourists who come to UAE every year,” Sawhney said.
UAE FTA Says tourists can claim VAT refund from November 18
The tax refund scheme for UAE tourists is in its final stage and the Federal Tax Authority (FTA) is all set to start the claim process from November 18, 2018. This will enable tourists to claim refunds of VAT paid by them on their purchases made in UAE.
In the first phase of implementation, the digital system for VAT Refund will be established at Dubai, Abu Dhabi and Sharjah airports. The system will be further expanded to cover all major airports, sea and land ports in the country and will be fully operational by mid-December. Tourists, who have valid tax invoices issued after November 18, would be able to claim a refund on the same.
How to claim tourist tax refund?
- In order to claim a refund of taxes paid by them in the UAE, the tourists will have to show their original passport to the authority.
- Some retailers may also ask for the passport from tourists and not charge tax on their supplies.
- Therefore, it would be advisable for tourists in the UAE to carry their passports with them all the time.
Read the Blog VAT Refund Dubai – How To Claim Vat Refund In UAE
Some tax experts believe that all the retailers in the country would be associated with the tourist refund system so that they can decide VAT liability at the time of supply. The authority may alternatively establish designated refund processing centres at various public places such as malls.
“The retailers will be able to directly issue refunds to tourists when they are buying the goods subject to the guidelines provided by the FTA. Guidelines will be issued for retailers to get registered and they will have to follow certain process for issuing any such tax refunds. It means, the retailers will have to retain a copy of tourist’s passport or visit visa, etc. as a proof to submit to the FTA for tax refunds,” said Nirav Shah, director, Fame Advisory. He is assuming that the tourist tax refund system may be implemented by 2018’s third quarter.
Some experts are also claiming that tax refunds to tourists will be available through airports, seaports, border ports and all other major ports and customs terminals. Anurag Chaturvedi, partner, Crowe Horwath expects the refund system to be implemented by the end of 2018’s second quarter.
Overall, the FTA’s decision to release a refund of taxes paid by tourists is being appreciated by various industry experts as the right move to help re-establish Dubai as a preferred shopping destination.
The VAT had caused an increase in the prices of many supplies in the UAE resulting in a drop in the demand but the tax refund system for tourists will definitely help the nation get back its reputation as a popular tourist destination.