April 19th, 2019

VAT refund system for tourists in final stages — UAE

VAT refund system for tourists in final stages — UAE

VAT refund system for tourists in final stages — Federal Tax Authority
The system operator will coordinate with retailers registered with the FTA.

The UAE’s Federal Tax Authority on Saturday said a system to return Value Added Tax (VAT) to the tourist is nearing its final preparation stages, with an advanced system to be put in place that corresponds with international best practices.
The new 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.

The UAE’s Cabinet last week approved the VAT refunds for tourists, although a global operator has not yet been named. The UAE implemented a 5 percent VAT all good and services in January.

“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 seaports of entry,” said FTA Director General Khalid Ali Al Bustani. “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.”


Intention to leave the country
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.

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