How tourists can get VAT refund in UAE
Designated spaces will be provided where tourists can easily reclaim taxes.
The Federal Tax Authority (FTA) on Saturday announced conditions and procedures for the tourists to claim their VAT refunds when exiting the country.
The Authority said the tourist needs to have purchased goods from retailers registered in the system which will go live soon.
It said designated spaces will be provided where tourists can easily reclaim taxes through a fully electronic system, without any human involvement.
"Upon leaving the country, the tourists will be able to reclaim taxes paid on their purchases in a fully electronic system. without any human involvement. The tourists shall submit the required documents and obtain a refund via credit card or in cash from the global operator," the authority said on Saturday.
Khalid Ali Al Bustani, director-general, FTA, said 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, land and sea ports of entry.
"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," he added.
The UAE Cabinet last week endorsed VAT refunds for tourists from the fourth quarter which is expected to drive growth in the tourism and hospitality sectors.
The FTA revealed that the project is nearing its final preparation stages and 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.
Anurag Chaturvedi, managing partner, Chartered House, said the UAE tax refund process is in line with global best practices where tourists will get the refund automatically credited to their bank account or credit card.
"Tourists will have to designate their preferred mode of settlements at the time of purchase and the merchant will make this choice specified into the tax system. The UAE ports and customs department will verify the taxable supplies at the time of exit to confirm the refund applicability," Chaturvedi said.
Meanwhile, the FTA said that the retailers who meet the requirements set by the FTA are free to register in the system if they choose to. And if a tourist decides 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.
Conditions for tax refund
>Goods in question need to have been supplied to the tourist within UAE
>Tourist must have the explicit intention to leave UAE in 90 days from the date of supply, along with the purchased supplies
>Goods in question must be exported out of the UAE by the tourist within three months from the date of supply
>Tourist needs to have purchased goods from a retailer registered in the system
>Purchase process must be carried out - and the goods exported - according to the requirements determined by a decision of the FTA
>Goods in question must not be exempted from refund
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