01 Oct UAE Tourist Tax Refund – A Step by Step Guide from the Experts
What is a Tax Free Shopping?
The UAE has introduced 5% VAT in January 2018 and will launch Tax Free Shopping for tourists in Q4 2018. The FTA has witnessed a great demand for registration in the Tax Refund Scheme for Tourist and now urges all retail stores to register to the digital system of the Refund Scheme, which is one of the most advanced of its kind in the world.
There are 4 basic conditions for registering:
- The Retailer must be registered with the FTA for VAT and have an existing tax registration number (TRN);
- The supplier’s sales of goods must NOT be excluded from the refund scheme
- The retailer must meet the financial credit requirements specified by FTA and is compliant by submitting Tax Returns and paying due taxes regularly
Let us first understand what is “Tax Free Shopping”
Tax Free Shopping is the purchasing of goods in the UAE which will be exported (subject to terms and conditions) whereby shoppers can obtain a refund on the VAT on these items, providing that they validate their purchases according to local rules. The scheme’s integrated system enables direct connection to all outlets and shops across the UAE.
Who is eligible?
A ‘visitor’ means any person who permanently or habitually lives in a country outside the UAE. Your address as shown in your passport or other identity document will be taken as the place where you permanently or habitually live. Therefore, for an example, a GCC National is eligible as stated under the current rules. The Tax Refund Scheme for tourists is in line with international best practice.
What is the benefit to you as a retail store?
Promoting “Tax Free Shopping” will help attract international travelers. The “Tax Free Shopping” will increase your share of international traveler spend. Tax refunds can only be claimed on goods which are exported. The tourist will receive a refund of 85% of the total VAT amount paid per Tax Free form.
How the system works:
Step 1: A tourist makes a purchase eligible for a “Tax Refund”
Step 2: The retail store captures tourist information using the system
Step 3: The retail store enters the transaction purchase price
Step 4: The retail store generates a QR code tag and attach on the back of the tax invoice
Step 5: The retail store scans the QR code to link the transaction with the tourist’s passport details
Step 6: A “Digital Tax Free Form” is then created which the tourist will present at any “Tax Refund Kiosks in airport, seaport or border crossing. (Please note that the tourist may be subjected to a further validation check and may need to produce the goods for inspection.)
Step by step guide:
How much does the tourist gets back:
The tourist will receive 85% of the total VAT amount paid minus the admin fee of AED 4.80 per Tax Free Form.
Note: Subject to maximum of AED 10,000/ tourist
The Refund Process:
A. By Card Refund
Go to validation point
Get card refund
Go to validation point
Go to refund point
Get cash refund
C. Self-validation via kiosk
Go to self-service kiosk