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24 April 2024

FTA: Tax refunds for tourists scheme to go live on Sunday

By Wam

The Federal Tax Authority (FTA) announced that the digital system for the Tax Refunds for Tourists Scheme will be ready to issue and process VAT refund claims for eligible tourists to recover tax incurred on their purchases as of Sunday, November 18, 2018, at Abu Dhabi, Dubai and Sharjah International Airports.

The Authority revealed that preparations are underway for phase two of the Scheme, which goes into effect on December 16, 2018, allowing overseas tourists to claim refunds of taxes at all other UAE airports and land and sea ports that are taking part.

At a press conference held in Dubai on Wednesday, November 14, 2018, Federal Tax Authority Director General Khalid Ali Al Bustani revealed that the number of retailers linked to the electronic system has exceeded 4,500 stores, adding that the number of targets is expected to rise next month to include more retail outlets across the UAE as the Scheme enters its second phase.The company hired to operate the system, Planet, has completed all necessary tests to ensure the system is running efficiently and accurately.

Al Bustani addressed the audience at the conference, which included officials from the FTA and the Operator, asserting that there has been a significant turnout among retailers to register for the Tax Refunds for Tourists Scheme. ''The Authority continues to collaborate with the operating company to organise workshops and seminars that introduce retailers to the simplified procedures and mechanisms to register in the system,'' noted, adding that the Scheme’s digital system is the most advanced of its kind, and was developed following thorough studies to meet the highest quality standards and best practices, and to feed into the wider electronic tax system, which the UAE was one of the first countries to implement.

"Cabinet Decision No. (41) of 2018 on Introducing the Tax Refunds for Tourists Scheme; FTA Decision No. (1) of 2018 on the Requirements for Retailers to Take Part in the Scheme; and FTA Decision No. (2) of 2018 on the Tax Refunds for Tourists Scheme have all set clear, transparent and accurate criteria for the procedures to be followed to reclaim VAT for tourists, which strengthens the UAE’s status as a leading international tourist destination," Al Bustani added, reaffirming that the system resonates with the vision of the UAE’s wise leadership to expand economic diversification policies and empower various sectors to contribute to the national GDP, which includes the promising tourism sector.

He said: "The FTA is keen to contribute to increasing tourism attractiveness, encouraging domestic trade and establishing the country as a central trading hub in the region. Among the incentives offered by the new system is the refund of VAT on purchases of up to AED 10,000 in cash for every overseas tourist within every 24 hours, which is high compared to the values allowed to be refunded in cash in many countries of the world, while there is no maximum cap where amounts due for refund are paid to the tourist's credit card.

The FTA Director General went on to add: "The Scheme includes integration to businesses registered with the FTA who wish to register for the Tax Refunds for Tourists Scheme as well as to entry ports around the UAE, which would allow eligible tourists to request refunds on taxes incurred on their purchases through a state-of-the-art digital system."

He cautioned that only invoices issued by retailers who are registered for the Scheme and connected to the system are eligible for a refund by tourists, adding that these retailers can be identified by posters they should display clearly on their storefronts.

The Authority had outlined several conditions for a tourist to be eligible for a tax refund, namely: The tourist needs to be at least 18 years old; they must meet the criteria specified in Cabinet Decision No. (52) of 2018 regarding the Executive Regulations of Federal Decree-Law No. (8) of 2017 on VAT, whereby goods eligible for the Scheme are supplied to an overseas tourist who was on UAE soil when the purchase was made, and who intends to exit the UAE along with the purchased items within 90 days; the goods are actually exported out of the UAE by the tourist within 3 months of the date of supply.

The Federal Tax Authority gave a presentation during the press conference, introducing the Tax Refund for Tourists Scheme and clarifying how it would operate for both tourists and retailers . The presentation clarified various aspects of the Scheme, as well as the locations where tourists can apply for a refund, and contact details for the system operator for follow-up, which can be done through the FTA website (www.tax.gov.ae) or the operating company’s website (www.planetpayment.ae).