SCHEME FOR VAT REFUNDS FOR TOURISTS
The federal tax authority on Saturday has announced a mechanism that is to be implemented in the fourth quarter of this year which would enable the tourists to reclaim taxes through a fully electronic system without any human involvement while leaving the country. This scheme has been implemented in accordance with the Federal Decree Law No. 8 of 2017 on VAT which have a provision of refund on a supply or import made by a non taxable person conducting business but not residing in UAE.
CONDITIONS TO CLAIM REFUND
- The goods are required to be supplied to the tourists within UAE
- From the date of supply, the tourists should have an intention to leave UAE within 90 days along with the purchased supplies
- From the date of supply, the goods must be exported out of UAE within 3 months
- The tourists are required to purchase goods from a retailer registered in UAE
- The goods must not be exempted from refund
- The purchase process must be carried out and the goods should be exported according to the requirements determined by a decision of the federal tax authority
- The tourist must be atleast 18 years old
- They must intend to leave UAE within 3 months of purchase along with the goods which they have bought
PROCESS TO GET THE REFUND
If the tourist decides to make the purchase with the intention of applying for a refund from a supplier which is registered for tax refund system, then the supplier is required to provide them with the necessary documents such as tax invoice in order to meet the legal requirements. After this, the tourist would be required to claim with the system operator directly to obtain the refund after providing sufficient evidential documentation.
PREPARATION OF THE FEDERAL TAX AUTHORITY
- The federal tax authority would allocate designated spaces to enable the tourists to reclaim taxes.
- Furthermore a digital system would be established which would determine the taxes that are eligible for a refund. It would also set up a direct connection with the points of sale and with all the ports of entry that would allow the global operator to coordinate among the registered FTA retailers to enable the tourists to submit refund requests for their purchases.
ELIGIBILITY OF THE SCHEME
For claiming VAT refund, the companies must first undergo credit assessment. They are required to do this since the customer is the party required to refund the VAT to the UAE government. the tourists would however be able to claim refund on the goods which they have purchased from the companies that have signed up to the scheme.
WHO CANNOT CLAIM THE REFUND?
Crew members on flight pr planes that are leaving the country are not eligible to claim the refund.
ROLLING OUT OF THE SCHEME
The first scheme of VAT refund was launched at Dubai, Abu Dabhi and Sharjah airports from 7:00 am on November 18,2018 . Whereas the second scheme was introduced on at other borders, ports and airports on December 16, 2018.
This provision of refund where the tourists would get the refund automatically credited to their bank has been implemented with global best practices in order to drive growth in the tourism as well as the hospitality sector. It would encourgae the retailers who were earlier apprehensive to register. It would also encourge the tourists, especially the high spending ones to shop more as they would know that the system is working correctly and that they can claim refund while leaving the country. For this purpose, the cabinet decision has set clear standards branded with transparency and accuracy to return VAT refunds to tourists visiting UAE.