Tourists to the UAE will be able to claim back the VAT on purchases they make whilst visiting the country, according to a draft executive regulation released by the Federal Tax Authority (FTA) on Wednesday.
The regulation does not, however, go in to details on how this process would work.
It does state that the refund system would only be eligible to those travelling to the UAE from outside the Gulf Co-operation Council (GCC).
The FTA has suggested that the exact mechanism for claiming back VAT will be agreed upon, and announced, by the UAE’s Cabinet, in the next two months.
According to the document, posted to the FTA’s website, the Cabinet “may issue a decision introducing the Tax Refunds for Tourists Scheme,” which will specify the following: The date on which the scheme comes into effect, the mechanism for tax refunds, and the limitations on claiming tax refunds, among other details.
Many countries which have similar tax regimes also offer VAT refunds to tourists.
In the UK, for example, shoppers who visit the country but live outside the EU and are going back home can get a refund on their VAT at customs as they leave the country.
Whilst in the UK, tourists can ask for a VAT 407 form from the retailer, and then upon leaving the country, they will be asked to show the goods, the completed form and their receipts to customs at the airport as they leave.
Customs will then approve their form if everything is in order. The approved form will enable the visitor to claim back their VAT, which is 20 per cent in the UK.
According to the executive regulations, the following conditions shall apply to the Tax Refunds for Tourists Scheme: The goods must be supplied to the visitor whilst he or she is in the country, at the time of purchase; the visitor must be intending to leave within 90 days of purchase; and the visitor must be from outside the GCC.
It also went on to add that the Cabinet may publish a list of goods that will not be eligible for refunds.