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The Federal Tax Authority (FTA) issued Decision No. 2 of 2024, amending the Tax Refunds for Tourists Scheme, effective from March 1, 2024. This decision introduces key changes to the scheme, impacting retailers, tourists, and operators involved in the UAE’s Value Added Tax (VAT) refund process.
Let’s delve into the intricacies of this decision.
Commencement Dates
The decision specifies the commencement dates for various aspects of the scheme. Retailers are required to initiate refund claims for tourists starting from November 18, 2018. Additionally, tourists can reclaim VAT at specific UAE airports from the same date, and from other airports, land ports, and sea ports starting December 16, 2018.
Purchase Procedures
Retailers participating in the Tax Refunds for Tourists Scheme must adhere to specific purchase procedures. These include verifying the Overseas Tourist status of customers and confirming their presence within the State during the purchase. Verification can occur in-store or through electronic platforms, provided the customer receives the Goods personally. Furthermore, retailers must ensure that Goods are supplied within 90 days from the request for refund documents. Additionally, retailers are required to record customer information and purchase details, issue necessary VAT refund documents, comply with handling procedures stipulated by the FTA, and refrain from issuing VAT refund forms to customers under 18 years old.
Export Procedures
The decision outlines stringent export procedures to ensure the legitimate exportation of Goods by Overseas Tourists. Operators of the scheme must verify that Goods are exported outside the UAE within 90 days from the supply date. Furthermore, they are responsible for verifying exported Goods and refund claims based on agreed-upon criteria. In cases where necessary, third-party verification may be employed with the consent of the FTA.
Fees and Refunds
Fees and refund regulations are specified under this article. The FTA is authorized to charge fees to Overseas Tourists, including an administrative fee equivalent to 13% of the VAT to be refunded, along with a fixed fee of AED 4.8 per refund claim. These fees are deducted by the Operator from the refund amount. Additionally, cash VAT refunds are capped at AED 35,000 per Tourist per 24 hours.
Minimum Purchase Value
A minimum purchase value requirement of AED 250 is established for Tax refunds under the scheme. Tax will not be refunded if the value of Tax-inclusive purchases from the same Taxable Person is below this threshold.
Excluded Goods
Certain Goods are excluded from the Tax Refunds for Tourists Scheme, including items not accompanied by the Tourist upon leaving the State, those consumed (fully or partially) within the UAE or other Implementing States, and motor vehicles, boats, and aircraft.
Conclusion
Decision No. 2 of 2024 on the Tax Refunds for Tourists Scheme introduces significant amendments aimed at enhancing the efficiency and integrity of the VAT refund process for Overseas Tourists in the UAE. These amendments streamline procedures, enforce stricter verification processes, and establish clear guidelines for fees, refunds, and eligible Goods, ensuring compliance and transparency across all stakeholders involved. Indeed, a welcome decision!
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.
