Last week, the Federal Tax Authority (FTA) announced that tourists to the UAE will soon be able to reclaim the value added tax (VAT) on the purchases they make while in the country. Khalid Al Bustani, the FTA’s top official, told journalists on Wednesday morning that he expected a company to be selected soon to handle tourist refunds.
The announcement will be well received by both tourists and the UAE’s hospitality industry as a whole. Tourists should not have to carry the burden of paying for the UAE’s infrastructure; that’s a duty that belongs to the country’s citizens and residents. This decision will also make sure the UAE’s tourism industry — and by extension the retail industry — does not becomes less competitive for those people considering where to spend their holidays.
Instituting this tax procedure would also certainly provide a needed boost to the gold and jewellery sector in the UAE, which is largely tourism driven and has been complaining that VAT has hurt sales. The FTA should now ensure that the implementation of the tax reclamation scheme and selection of the company that will oversee it is professional, transparent and sets policies in line with the best international practices. Tourists need to be assured of a smooth, reliable tax return process, while at the same time the FTA needs to be sure that no one takes advantage of the system to avoid paying what is due.
Companies charging VAT in the UAE will also need to ensure that their tax procedures are in order, as incorrectly charged tax or erroneous receipts could be a direct hindrance to tourists looking to reclaim the money they have a legal right to.
