UAE Tax Free Shopping-How Tourist can claim VAT Refund
By Alia Noor, FCMA, CIMA, MBA, Oxford fintech programme, GCC VAT Comp Dip,COSO Framework.
Associate Partner Ahmad Alagbari Chartered Accountants, UAE
The UAE introduced a Value-Added Tax (VAT) of 5% in 2018, but tourists can still enjoy tax-free shopping.Tourists and visitors can claim refund on VAT paid on purchases they made during their stay in the UAE.Recovery of payment will be done through a fully integrated electronic system which connects retailers registered in the ‘Tax Refund for Tourists Scheme’ with all ports of entry and exit from the UAE.
What is Tax Free Shopping?
Tax Free shopping is the purchasing of certain taxable goods in the UAE which will be exported (subject to terms and conditions) whereby shoppers can obtain a refund of the VAT charged on these goods, providing that they validate their purchases at the point of exit.
Tourist will refunded 85% of the total VAT amount paid, minus a fee of 4.80 Dirhams per Tax Free Tag.
VAT Refund for UAE Tourists-Who are Eligible ?
You should meet the following criteria to become eligible for a VAT refund.
- Tourist must be above the age of 18 years and not resident in the UAE.
- Purchased the goods from the registered retailer shop.
- Crew members on flights leaving the UAE are not eligible to claim.
- GCC Nationals are eligible. Please note that there may be restrictions on UAE nationals who are resident abroad for the purposes of studying.
- Tourist must be leaving the country within three months after the purchase of goods.
What goods are Eligible for Tax Free Shopping?
Certain VAT applied goods or products are eligible for a tax refund except those that fall within these categories:
- Goods that have been consumed, fully or partly, in the UAE
- Motor vehicles, boats and aircrafts
- Goods that are not accompanied by the overseas tourist at the time of leaving the UAE
Services purchased and consumed by tourists and visitors do not qualify for VAT refund. Thus visitors need to know that VAT charged on their hotel bills, hospital bills or restaurant bills are not eligible for VAT refund.
How to spot a Tax-Exempt shop
Shops who participate in the FTA’s tax refund scheme for tourists usually display a board indicating goods purchased there are eligible for VAT refund. But to be on the safer side, tourists should check if the shops are registered for VAT refund scheme.
How do Tourist do shopping Tax Free?
- The tourist must purchase the goods from a retailer that is registered in the system.While at the store, request a Tax Free purchase, valid on a minimum expenditure of AED250.
- Present your passport to be scanned for use on the payment system.The shop assistant captures information from the tourist’s Passport or GCC National ID card using the solution (this should be the same Passport or GCC National ID that was used to enter the UAE).
- The shop assistant enters the transaction purchase price.
- Allow the shop assistant to attach a Tax Free tag to the back of the sales receipt.
- The Tax Free Tag is scanned to link the transaction with the tourist’s Passport or GCC National ID card.
Where to claim VAT refund?
Tax refunds can be claimed at all airports and land and sea ports in the UAE. In addition, the services are now offered at some of the leading malls in self-service kiosks and money exchange houses.
How to claim a VAT refund?
Upon leaving the UAE, tourists will be able to reclaim taxes paid on their purchases in a fully electronic system, characterised by its simplicity, accuracy and speed, without any human involvement. The tourist shall submit the required documets and obtain a refund via credit card or in cash from the global operator.
All Tax-Free tags must be validated within 90 days from the date of purchase.If not done in time, the Tax-Free tags will expire and concerned shoppers will not be eligible for any claims.
Tourist need to validate their goods
Tax invoices, tax free tags and purchased goods may be subject to physical inspection at the border points to verify eligibility, therefore tourists should have these available.
- Before you check in your luggage, take the goods and tagged receipt to one of validation
- Scan or enter your passport number or GCC National ID card.
- Follow the instructions on screen, and if you get a green light, you’ve completed the validation process.
- If you get a red light, contact one of our Planet staff who are standing next to the validation point for help.
- Choose your preferred refund method – credit/ debit card or cash.
- Planet processes the refund
For cash refund, the maximum refund amount is 7,000 AED per tourist. Any additional value over this amount must be paid to a credit/debit card
Tourists are eligible to receive 85% of the total VAT amount paid. The remaining 15% is charged as administration fee by Planet.