The UAE VAT refund at Dubai Airport Scheme for Tourists was introduced in November 2018 to provide tax-free shopping. This was made public many months after the five percent VAT rate was implemented in January 2018.
Any natural person who isn’t a resident of an implementing state or a crew member on any aircraft or flight departing a VAT-implementing state is eligible to process a tourist VAT refund, according to Cabinet Decision (No. 41) of 2018 on Tax Refunds for Tourists and Federal Tax Authority Decision (No. 2) of 2018. According to the present tax laws, GCC citizens who are not citizens of an implementing state are eligible.
What is a refund of VAT?
All registered businesses must submit a VAT return with information on their sales, purchases, output VAT, and input VAT paid during the tax period. In this case, the amount paid to the supplier for assets or expenses is known as input VAT, and the amount collected on sales is known as output VAT. The output VAT amount may be added as needed to the eligible input VAT amount. One of the following outcomes will arise from altering the input VAT and output VAT.
VAT Payable: The remaining VAT must be paid to FTA if the output VAT amount exceeds the input VAT.
VAT Refundable: The surplus balance will be subject to a VAT refund if output VAT is less than the amount of input VAT.
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What commodities are eligible for VAT refund at Dubai Airport?
Tourists can submit their purchases for VAT refunds in the UAE at commercial airports, land airports, and seaports, with the following exceptions:
- goods that have been consumed in full or in part in the UAE or another implementing state
- any motorized vehicles, including boats and aircraft
- Items that transports out of the UAE without an accompanying foreign tourist
What are the prerequisites to process a VAT refund at Dubai Airport?
The following are the requirements that must meet at the time the tourist VAT refund application is validated:
- With a tax return tag, a tax invoice, or sales receipt (minimum spend of Dhs 250)
- travel authorization
- ticket for travel
- acquired goods (the purchased goods must be presented to the validation desks before checking in the luggage).
Take note: Be aware that to receive a refund of your UAE tourist tax, you must depart the country within six hours of the validation procedure being finished. Failure to do so may result in the cancellation of a refund. You can still receive your tax return by starting the tax refund validation procedure over again.
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How much in the UAE can tourists receive as a tax refund?
Tax savings may be substantial depending on the cost of the goods acquired. VAT refunds in the United Arab Emirates may appear insignificant at a regular VAT rate of 5%. This is particularly true when you take into account the hassle of finding VAT-registered retail outlets, acquiring tax invoices, requesting a refund under the VAT refund system for tourists in the UAE, and then submitting the actual products to the validation point.
For travelers making small purchases in the UAE, the VAT refund may be paltry. Most people believe they aren’t even worth the trouble in this situation. UAE remains one of the top locations worldwide for luxury shopping, nevertheless. As a result, tax savings can add up and are much valued.
The tax savings don’t need to result from a single big transaction. The tax that a tourist accumulates from their purchases throughout their visit to the country might add up to a sizable sum, making it worthwhile to get a refund.
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Is there a cap on the UAE’s VAT refund to visitors?
Applicants must submit the tax invoices from purchases of products with tax-free tags or stickers. Retail establishments registered with the UAE Federal Tax Authority must issue proper tax invoices. The amount visitors can recover if the refund is delivered to bank accounts is unrestricted by the local tax authorities. However, there is a cap of Dhs 10,000 if the return is sought in cash.
How do I apply at the exit ports in the UAE for a tourist VAT refund?
Tourists can electronically file a VAT refund claim at the airport and port departures, as was previously announced. A tourist must provide a tax invoice from a registered store where products were purchased to receive a refund. A tourist must have a credit card, passport, and the appropriate tax invoice when filing a claim. The tax refund will be transferred through a credit card to avoid touching cash.
Additionally, there are self-service kiosks for tourist VAT refunds in UAE’s top hotels and shopping centers. In addition to the kiosks at UAE departure points, the Federal Tax Authority expanded the network of VAT recovery kiosks to include hotels and shopping centers. The tax administration has approved Planet to manage the e-system and self-service kiosks for tax refunds for visitors to the United Arab Emirates.
The self-service kiosks’ cutting-edge technology enables travelers to handle requests for tax refunds in the UAE fully. Refund requests made through a Planet kiosk can be processed entirely in minutes. Presenting the actually purchased items that qualify for a tax refund is no longer necessary. However, the kiosks must be used to scan the required documentation.
Do any additional tourist taxes exist?
Numerous products are subject to excise taxes. The purchase price already includes this. Excise taxes are mostly found on alcohol, energy drinks, sweets, tobacco, and its derivatives.
Another option is the tourism taxes, which mostly affect hotels.
A hotel bill should include the following:
- 5 percent VAT
- Municipal fees (about 7 percent )
- Tourist fee (around AED 10 – 20 per room per night)
- service charge (about 10 percent )
When you make an online reservation, these taxes are typically already included in the price, which is a fantastic approach to avoid any unpleasant surprises.
Service fees and VAT (5%) are typically included in the menu prices in restaurants. Restaurants in the UAE do not expect tips. You can round up your bill or leave a 10% tip if you have a good meal.
Regarding alcohol, consider the intricate laws that most emirates, like Dubai or Abu Dhabi, have in place (alcohol is prohibited in Sharjah).
The VAT (5%) that is applied to alcoholic beverages in Dubai restaurants and bars is typically already factored into the menu price. A specific license is needed to purchase alcohol from liquor outlets. Right now, visitors can get a free 30-day permit that is given out in the liquor store.
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