ABU DHABI 13 November 2018: Expat Alert — if you have friends or relatives visiting and they have made purchases in the UAE before returning home, you can help them get refund of the Value Added Tax (VAT) they paid, from Sunday onwards.
An overseas tourist may get a refund of the VAT at the Abu Dhabi, Dubai, and Sharjah International Airports as of next Sunday. The overseas tourist may also recover the VAT at the other airports and land and sea ports in the UAE as of December 16, 2018.
Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance, and Chairman of the Federal Tax Authority (FTA), issued the Decision No. (2) of 2018 on the Tax Refunds for Tourists Scheme, setting out the implementation dates for phases one and two, the procedures for the verification of tourists’ eligibility for the tax refund, the fees charged for refunds and their application, the maximum cash recovery, the minimum value of purchases subject to the refund, and the goods excluded from the refund.
The Decision No. (2) of 2018 comprises of seven clauses and stipulates that Value Added Tax (VAT) refund claims shall be provided by retailers participating in the Tax Refunds for Tourists Scheme as of Sunday, November 18, 2018.
- Retailers registered in the Tax Refunds for Tourists Scheme must follow 5 steps if the customer requests to make a purchase under the scheme.
- The Scheme Operator will verify both the export of the goods and refund requests according to the Federal Tax Authority standards.
- The maximum cash amount that can be refunded to a tourist in a 24-hour period is Dh10,000.
- The minimum value of purchases subject to the refund shall be Dh250.
Furthermore, the Decision determined five steps that retailers must follow when a customer asks to make a purchase under the Tax Refunds for Tourists Scheme. The First Step requires:
- Conducting the necessary due diligence – as outlined by the FTA and Scheme’s Operator – to verify whether the customer is an “overseas tourist” as per Clause 3 of Article 68 of Cabinet Decision No. 52 of 2017
- That they are in the UAE when making the purchase
- That they were present at the retail store along with their purchase invoices when claiming the refund documentation. The procedure also calls for determining if the supply was made in a period not exceeding 90 days on the date on which the refund claim is requested.
Step Two requires the retailer to:
- Record the customer’s information and details of the purchase – again as determined by the FTA and the Scheme Operator
- To issue the necessary documents for the customer to claim the VAT refund when exporting the goods.
Step three:
Retailer must comply with all procedures pertaining to handing over, packaging and delivering goods, according to FTA conditions set for certain goods or categories of goods, as well as meeting other conditions determined in the agreement approved by the retailer to offer tax-free purchases.
Step Four: Retailers must also verify that the customer is 18 years of age or older before issuing them with refund claim. The scheme operator, meanwhile, is prohibited from refunding taxes to overseas tourists before verifying that the said tourists exports the goods in question outside the UAE within 90 days of the date of supply of such goods.
Step Five: The final step calls on the Scheme Operator to verify that the exported goods and the refund claim adhere to the requirements agreed upon with the Federal Tax Authority. The operator may enlist a third party to verify these criteria if authorised to do so by the FTA.
According to the Decision, the authority may collect fees from overseas tourists applying for the tax refund, namely, an administrative fee amounting to 15% of the VAT amount refunded to the overseas tourist, and a fixed fee of Dh4.8 for every claim. The Scheme Operator then deducts these fees from the total amount to be refunded to the overseas tourist on behalf of the FTA. The maximum cash amount that can be returned to a tourist for a 24-hour period is Dh10,000.
The Decision also stipulates that tax cannot be refunded under the scheme unless the total value of tax-inclusive purchases issued by the same Taxable Person – is Dh250 or more.
Decision No. (2) of 2018 specified three categories of goods to be excluded from the Tax Refunds for Tourists Scheme, namely:
- Any goods that the overseas tourist does not have with them once leaving the UAE
- Goods that were entirely or partially consumed in the UAE or any other implementing state; and
- Motor vehicles, boats and aircraft