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12 April 2024

Federal Tax Authority: Electronic System to Return VAT to Tourists Entering Final Preparation Stages


The Cabinet Decision to implement a system that returns Value Added Tax (VAT) to tourists will cement the UAE’s status as a premier global tourist destination, asserted the Federal Tax Authority (FTA).

In a press statement issued today, the Authority explained that the Cabinet Decision has set clear standards branded with transparency and accuracy in returning VAT refunds to tourists visiting the UAE.

The Authority revealed that the project is nearing its final preparation stages, where an advanced system will be put in place to corresponds with international best practices. The system relies on an advanced integrated digital system to set up a direct connection with points of sale, as well as with all UAE ports of entry, allowing the global operator to coordinate among retailers registered with the FTA, and enable tourists to submit refund requests for their purchases.

FTA Director General Khalid Ali Al Bustani asserted that the Cabinet Decision to implement a system that returns VAT to tourists is in line with the forward-thinking vision of the UAE’s wise leadership to diversify the national economy and promote all economic sectors to increase their contribution to the Gross Domestic Product (GDP), including the country’s vibrant and promising tourism sector.

"The system operator will be signing agreements with retailers to provide them with the necessary technology to connect with the FTA, as well as with airports, and land and sea ports of entry," he continued. "Designated spaces will be provided where tourists can easily reclaim taxes. The digital system determines the taxes that are eligible for a refund and then reimburse tourists. This complements the Government’s commitment to implementing the UAE tax system and ensuring that it is in line with global standards."

The Federal Tax Authority conducted extensive studies to formulate an optimal tax refund system, discussing the results of this research in successive board meetings before finally contracting with the international system operator, Al Bustani concluded.

The Authority outlined a set of basic conditions for the tourist to qualify for a tax refund through the system, in accordance with the Cabinet Decision: The goods in question need to have been supplied to the tourist within the UAE borders; the tourist must have the explicit intention to leave the country within 90 days from the date of supply, along with the purchased supplies; and finally, the goods in question must be exported out of the UAE by the tourist within three months from the date of supply.

The Decision also stipulates that for the tax refund to be approved, the tourist needs to have purchased goods from a retailer that is registered in the system; additionally, the purchase process must be carried out – and the goods exported – according to the requirements determined by a decision of the FTA Chairman; and finally, the goods in question must not be excepted from refund.

The Federal Tax Authority asserted that retailers who meet the requirements set by the FTA are free to register in the system if they choose to. And if a tourist chooses to make a purchase with the intention of applying for a refund of the tax from a supplier registered for tax refund system, then the supplier must provide them with the necessary documents to do so, most notably a tax invoice that meets all legal requirements. The tourist then submits the claim with the system operator directly and obtains the refund from the operator where sufficient evidential documentation has been provided.