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|14 November, 2018

Unlimited VAT refunds for tourists in UAE

Most refunds expected to come from purchases of gold jewellery, electronics and luxury goods

Image used for illustrative purpose. Signage pointing the customs and VAT refund office is seen in a Duty Free store at Malta International Airport in Luqa, Malta August 2, 2017.

Image used for illustrative purpose. Signage pointing the customs and VAT refund office is seen in a Duty Free store at Malta International Airport in Luqa, Malta August 2, 2017.

REUTERS/Darrin Zammit Lupi
 

Tourists visiting the UAE have a reason for joy as the government has set no minimum limit for tourists' VAT refund, which will come into effect from Sunday, November 18.

Gary Byrne, director of new markets and group strategic partnership at Planet, said the daily maximum VAT refund for tourists has been capped at Dh10,000 in cash. But if the refund claim exceeds that amount, then the funds will be transferred electronically to the tourist.

"If it is a cash refund, then the limit is Dh10,000 and if it is unlimited, then the tourist will be refunded by transferring the amount electronically to his/her account, debit or credit cards," Byrne told Khaleej Times on the sidelines of a Press conference in Dubai on Wednesday.

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Planet will manage the entire process for tourist VAT refunds on behalf of the UAE's Federal Tax Authority (FTA).

Byrne revealed that the number of companies registering for the tourist VAT refund scheme are expected to more than double from currently 4,500-plus to 6,000 by the end of 2018 and 10,000 by early next year.

The registered companies come from all sectors, mainly electronics, gold traders, general traders, souks and others, he added.

"Most of the malls and retail groups have been engaged with us and are ready for VAT refund. We are engaging on a multi-level to have everyone on board. Yes, 100 per cent of major malls and retail groups are ready," he said.

Byrne expects most of the VAT refund from tourists will be from purchases of gold jewellery, electronics and luxury goods.

The total value of tax inclusive purchases from the retailer must amount to a minimum of Dh250 to be eligible for a refund. Tourists will not receive the full 5 per cent VAT because the refund is limited to 85 per cent of the VAT amount paid to the retailer, less a one-off administrative fee of Dh4.80 per tax-free form.

Khalid Ali Al Bustani, director-general of the FTA, said retailers must pass credit check and continuously settle tax payments and submit VAT returns to be eligible for the refunds.

"If they'll stop paying taxes and tax returns in future, the FTA can terminate them from the scheme... and if tourists are leaving after 90 days, they won't be getting a refund," he said.

Rob Dalla Costa, VAT director at KPMG, said the refunds are likely to have a positive impact on the psychology of tourists looking to shop in the UAE.

"Refunds will cover a broad range of goods sought by tourists, and are in line with practices in other countries... to date, thousands of retailers have registered to take advantage of the scheme. This is yet another important marketing initiative retailers can use to boost sales and ensure that the UAE remains an attractive shopping destination," Costa said.

Byrne said this scheme will certainly play a key role in boosting inbound tourism to Dubai and the UAE.

"It is a very positive move. We have witnessed it in a number of countries that we operate in that the tourism and inbound tourism sector is very welcoming of such schemes. The government has had the foresight to adopt such scheme and we see it as very positive for Dubai and UAE tourism industry," he said.

- waheedabbas@khaleejtimes.com

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