The Federal Tax Authority (FTA) has announced that Tax Refund for Tourists Scheme goes into effect on November 18, allowing eligible tourists to request refunds of the Value Added Tax (VAT) incurred on their purchases.
The first phase will see the digital system of the Tax Refund for Tourists Scheme implemented at Abu Dhabi, Dubai and Sharjah International Airports. As of mid-December, the system will be fully operational to include all airports and land and sea ports in the UAE, as stipulated in the Cabinet Decision which aims to strengthen the UAE’s leading position as a major destination on the global tourism map.
The Authority explained that tax invoices issued starting from November 18, 2018, will qualify tourists who are eligible for a tax refund to reclaim taxes incurred on their purchases.
FTA Director General Khalid Ali Al Bustani asserted that more than 4,000 retail outlets across the UAE will be connected electronically to the system, clarifying that only the invoices issued by retail outlets registered in the Scheme and connected to the system are eligible for a refund. These eligible outlets can be identified with posters displayed on their storefronts and visible to visitors.
"The electronic Tax Refund for Tourists Scheme, which is implemented by the FTA in collaboration with Planet, the global operator of the system, is currently being finalised," Al Bustani added. "The Scheme will be fully operational as per the timeline we set for it and will include integrated electronic programmes and mechanisms for direct connection between retailers and tax refund offices for tourists at airports and land and sea ports."
He noted that this important step is in line with the UAE leadership’s directives to strengthen economic diversification and increase the contribution of non-oil sectors to GDP – especially the tourism sector, where the UAE has set an ambitious vision to attract increasing numbers of tourists and to raise the competitiveness of the national economy. Implementing the Tax Refund for Tourists Scheme helps attract larger numbers of tourists and allows them to enjoy the UAE’s unique tourism offering, especially in retail.
"Over the last period, there has been a significant increase in the number of agreements signed with retailers to register in the digital system of the Tax Refund for Tourists Scheme. This will equip them with the system’s advanced technologies, which are connected with airports and land and sea ports. The exact refundable taxes are identified, and the payments are received through the electronic system, which is the latest of its kind in this field," he added.
Al Bustani stressed that the high demand for registration is a healthy indicator of the business sector’s cooperativeness during the large-scale campaign launched by the Authority to introduce the Scheme, outline the steps for registration, and highlight the requirements listed in induction programmes through the official website of the Authority, social networking sites, newspapers and audio-visual media.
Extensive meetings were held with representatives of retail companies, outlets and shops in all seven emirates as part of the direct and continuous communication with business sectors to familiarise them with the conditions and steps of registration in the digital system of the Tax Refund for Tourists Scheme.
Al Bustani asserted that the Authority intends to continue holding ongoing meetings during the next phase to provide the opportunity for the largest number of retail companies to be part of the new system. The new system is characterised by simple and fast digital procedures through which the VAT is refunded for tourists on their purchases made during their presence in the UAE, he asserted, adding that this step comes in line with the Government’s efforts to support the application of the tax system in the country, ensuring that it conforms to the best international standards.
The FTA explained that the Tax Refund for Tourists Scheme is applied once they leave the UAE, where tourists will receive their refunds through a special device at the departure port (airport, seaport, or border port), by submitting the tax invoices for their purchases from the outlets registered in the Scheme, along with copies of their passport and credit card. Once these documents are submitted, tourists can either recover the VAT in cash in UAE dirhams, or have it transferred to their credit card.
The Authority noted that Cabinet Decision No. (41) of 2018 outlined a clear set of standards for transparency and accuracy in the procedures to refund VAT to tourists visiting the UAE, and who are not residents in the country. It stressed the need for a set of basic conditions to determine that the tourist is eligible for tax refund through the system. These include: The purchases in question must be subject to the Tax Refund for Tourists Scheme; the supplies are bought in the UAE by a tourist coming from abroad; the tourist has the explicit intention at the date of purchase to leave the country within 90 days; and that the tourist takes with him/her the purchases within three months from the date of purchase.
In accordance with the Decision, the Tax Refund for Tourists Scheme requires that all the purchases are made from outlets registered in the system.
The FTA said that each retailer fulfilling the requirements may register in the scheme. If tourists express their desire to these registered retailers to make purchases with tax refunds, the concerned retailers must submit the required documents to claim the tax refund through the Scheme as specified by the FTA, including tax invoices that meet all the legal requirements.
Tourists must then apply for a refund of the tax directly from the operator and provide sufficient and convincing evidence.