UAE’s Tourist Refund Scheme – A Win-Win Mechanism

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Tourism plays a crucial role in the UAE’s economy, and the Tourist Refund Scheme provides a financial incentive for international visitors to shop locally. Launched in 2018, this program allows tourists to claim VAT refunds on certain purchases. Tourists can receive 85% of the VAT paid, with a 15% deduction as an administrative fee.

The initiative aims to make the UAE an even more attractive shopping destination for global travellers.

Eligibility Criteria for Tourists

To benefit from the VAT refund, visitors must meet specific criteria. First, they should be non-residents of the UAE or any other GCC country. Additionally, they must be over 18 years old and must intend to leave the country with their purchases within 90 days from the date of supply. Goods should be physically taken out of the GCC within three months of purchase, and the minimum spend should be AED 250. Items such as food, vehicles, and services are excluded from the scheme, as these are either consumed locally or not eligible for tax-free shopping.

Procedure to Claim Refund

Tourists must follow a simple process to receive their VAT refund. Upon making the eligible purchases, they should request a tax-free tag from the store, which is linked to their passport or GCC National ID. When departing the UAE, visitors can validate their purchases at designated validation points, such as airports, seaports, or land border crossings. Planet, the scheme’s global operator, offers two refund methods: credit card or cash. The cash refund is capped at AED 10,000, with any additional amount credited directly to the tourist’s bank account.

Another crucial aspect of the refund process is export validation, which confirms that the goods purchased are leaving the UAE. Without export validation, tourists are ineligible for VAT refunds. Planet ensures that this validation process is smooth, and tourists are kept informed of any further steps or inspections required.

Planet and FTA Collaboration

The success of the Tourist Refund Scheme is driven by the strong collaboration between the FTA and Planet, a global leader in payment processing. Planet’s technology ensures the refund process is fully electronic, making it efficient and secure. Their self-service kiosks and expert staff assist tourists in validating their Tax-Free purchases with ease, whether through a smartphone app or physical support at airports. This strategic partnership simplifies the VAT refund process, making it convenient for both tourists and merchants. Detailed information on Planet’s services is available here.

Merchant Participation 

Businesses in the UAE can register for the Tourist Refund Scheme by signing up with Planet. They must provide their Tax Registration Number (TRN) and trade license details to issue Tax-Free tags to tourists. While merchants don’t face upfront costs or subscription fees, they are required to reimburse Planet for the VAT claimed by tourists, which they can adjust in their VAT returns.

Conclusion 

The UAE Tourist Refund Scheme is a win-win solution for both tourists and the businesses. For tourists, the scheme offers a substantial saving on purchases, encouraging them to shop more during their stay. The process is quick, with validation taking just a few minutes. For businesses, participating in the scheme enhances their attractiveness to international visitors, fostering increased sales and customer satisfaction.

Businesses in the UAE must consult their tax advisors if they are not already taking a benefit of this scheme. 

Disclaimer: Content posted is for informational and knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.

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