UAE launches unique tax free system for tourists

The United Arab Emirates has launched the world’s first VAT refund system for tourists who made purchases in online shops during their stay in the country.

According to the UAE’s Federal Tax Authority (FTA), the system was launched in cooperation with Planet, the authorised operator of the tax free programme for international travellers.

The system is completely paperless and constantly updated, and is a digital platform where tourists can scan their passports, make purchases and automatically share receipts.

Travellers will be able to receive a VAT refund on all purchases, whether made in traditional shops or on online e-commerce platforms. This will require uploading personal documents and cheques to the platform.

The VAT refund is processed once the identity of the foreign guest is verified at the time of delivery or fulfilment of the online order.

The TAX Refund (TAX Free) system – a VAT refund for goods bought by tourists within the country – was announced in the UAE in 2018. A tourist who bought goods in UAE shops can claim a VAT refund within 90 days of the purchase.

At the same time, the maximum lump sum cash refund cannot exceed AED 7,000 (US$ 1,900). There is no upper threshold for credit card tax refunds.

A tourist (or other non-resident of the UAE) applying for a VAT refund must be of legal age and must leave the UAE within three months of the purchase and take the goods with them.

VAT refund rules do not apply to aircraft crew members, VAT cannot be refunded on yachts, cars, motorbikes or aeroplanes, and VAT is not refundable if the goods were partially or fully consumed (used) within the UAE.

Source: Arabian Business