When visiting a foreign country, the last thing you want to worry about is taxes. However, understanding tax processes can help you save money, especially when you are shopping in a country like the United Arab Emirates (UAE). The UAE introduced a Value Added Tax (VAT) system in 2018, but it also offers a VAT refund scheme for tourists. If you’re planning to visit this vibrant and cosmopolitan country, this guide is here to help you understand how the UAE’s VAT refund system works for tourists.
Understanding VAT in UAE
VAT, or Value Added Tax, is a form of indirect tax applied in more than 160 countries worldwide. In the UAE, it is applied at the standard rate of 5% on most goods and services, excluding specific essential items like healthcare and education. This means that when you shop in the UAE, most of your purchases will have a 5% VAT added to the price.
The VAT Refund Scheme
Understanding the VAT is essential, but the exciting part for tourists is the VAT refund scheme. In November 2018, the UAE government launched a scheme, ‘Tax Refunds for Tourists Scheme‘, allowing foreign visitors to claim back VAT paid on purchases they made during their visit.
The scheme, managed by the Federal Tax Authority (FTA), gives tourists the opportunity to receive a refund of the VAT paid on a wide range of items, from electronics and jewellery to clothing and luxury items, as long as these goods leave the UAE with the purchaser.
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Eligibility and Conditions for VAT Refund
The conditions for claiming a VAT refund are pretty straightforward:
- The claimant must be at least 18 years old.
- The claimant must be a foreign visitor. UAE residents and GCC nationals are not eligible.
- Goods must be purchased from a retailer participating in the ‘Tax Refund for Tourists’ scheme.
- Goods should not be excluded from the FTA’s refund scheme.
- Goods must be for personal use and not for commercial use.
- The tourist must physically present the tax invoice, ‘tax-free’ tags, and the goods at the airport.
- The claimant must exit the UAE within 90 days of the purchase, carrying the items.
Please note that refunds are not applicable on goods consumed fully or partially within the UAE, or goods not in the possession of the tourist when leaving the country.
How to Claim Your VAT Refund
Claiming a VAT refund in the UAE is a simple and streamlined process. Here’s a step-by-step guide to help you:
1. Make Your Purchase: When shopping, look for stores with the ‘Tax-Free’ logo. After purchasing your items, ask for a ‘Tax-Free’ receipt.
2. Validate Your Purchase: Before leaving the UAE, go to the VAT refund kiosk at the airport. Here, you’ll validate your ‘Tax-Free’ receipt using the self-service kiosks, which will then print out a Tax-Free form. For some high-value goods, you might have to present the items for physical inspection.
3. Claim Your Refund: Submit your Tax-Free form at the refund counter. You can choose to receive your refund via credit card or cash.
Please note that a small administrative fee may be deducted from the refund.
How to Track Your Tax Refund
Keeping track of your VAT refund is made easy in the UAE through a simple and tech-savvy method. By using a QR code system, you can quickly check the status of your VAT refund. Here’s a step-by-step guide:
- Open your smartphone’s camera app.
- Point it at the QR code on the Tax-Free tag attached to your receipt.
- Open the URL link that appears on your smartphone’s web browser.
Following these steps will show you one of the following refund statuses:
- Issued: Your Tax-Free Tag has been issued by the store, but you have not yet validated it at one of the exit points when leaving the UAE.
- Export validated: You completed the validation process, and your refund is ready to be collected if you selected “cash” as your refund option, or it can be claimed by changing your refund method to a card.
- Waiting for goods validation: Goods must be inspected by our team at the validation point before you leave the UAE, otherwise, a refund cannot be processed.
This real-time tracking system ensures transparency in the VAT refund process, enabling tourists to stay updated about their refund status seamlessly.
Final Thoughts
The UAE’s VAT refund scheme is a boon for tourists who love shopping. Not only does it make visiting the UAE more attractive, but it also ensures that the shopping experience is delightful and beneficial for visitors. As long as you follow the correct process and meet the criteria, you can easily claim back a significant portion of your spending, making your trip to the UAE even more memorable. Happy shopping and safe travels!
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