Understanding VAT in the UAE: An Overview
To learn about how to Claim VAT Refund in UAE for Tourists and Business Visitors, You need to know more about VAT –
On January 1, 2018, the UAE government introduced the VAT tax to diversify its revenue sources and reduce its dependency on oil income. VAT provides a sustainable source of public funding for the UAE government, which uses the funds for infrastructure, healthcare, education, and other essential services, ensuring long-term economic stability and growth.
In the UAE, VAT is at a standard rate of 5%. Consumers pay VAT on most goods and services. These consumers could be business owners, tourists, residents, or expats.
To know more about VAT in UAE and NNCA VAT services
The VAT Refund:
Everybody likes a refund, and the good news is that specific consumers are eligible for VAT refunds. In the UAE, VAT refunds are available to tourists, non-resident businesses, diplomats, and specific international organisations.
Why do these refunds matter, especially for Non-residents such as tourists and business visitors? Applying for refunds is consequential as:
VAT refund in Dubai for tourists can save significant money on certain purchases. VAT is 5% of everything you shop in the UAE; hence, the more you spend, the higher the VAT
Reclaiming VAT reduces the cost of business operations, which helps manage the business effectively.
How to Claim VAT Refund in UAE for Tourists: All you need to know
Tourists visiting the UAE can get VAT refunds on eligible purchases through the “Tax Refund for Tourists Scheme.” The UAE government has made the process simple and accessible by using an electronic system that connects registered retailers with all entry and exit points across the country. This system ensures a smooth and efficient refund process for Dubai and UAE tourists.
What Is Tax-Free Shopping?
Tax-free shopping allows tourists to get VAT refunds on purchases made in the UAE. Launched in 2018 by the Federal Tax Authority (FTA), this fully digital system makes refunds quick and easy. However, authorities should approve your purchases when you leave the UAE, and you can request refunds within one year of this approval.
Operator of the VAT Refund System
Planet is the exclusive operator of the UAE VAT refund system for tourists. It works with the Federal Tax Authority (FTA) to manage the “Tax Refund for Tourists Scheme.” Planet’s system connects registered retailers across the UAE to entry and exit points like airports, seaports, and land borders, making VAT refunds easy and efficient for tourists.
Through Planet, tourists can:
- Request tax-free purchases at participating stores.
- Use a digital system to generate tax-free tags and receipts.
- Claim VAT refunds at departure points in cash or via credit card.
Make a Tax-Free Purchase:
- Purchases must meet a minimum spend of AED 250.
- Request tax-free shopping at participating stores.
Provide Travel Documents:
- Show a valid passport or travel document for scanning.
Get a Tax-Free Tag:
- Retail staff will use the Planet system to create a digital tax-free form.
- A “tax-free” tagged on the sales receipt.
Validate the Purchase:
- Purchases should be approved at the airport or exit port within 90 days.
Conditions for VAT Refunds
Eligibility Requirements:
- Tourists must be at least 18 years old.
- Goods must be purchased from retailers registered in the scheme.
- Items must be included in FTA’s refund list.
- Tourists must present the tax invoice, tax-free tags, and goods during validation.
Non-Refundable Items:
- Goods consumed wholly or partly in the UAE.
- Items not in the tourist’s possession when exiting the country.
How to Collect VAT Refund in UAE for Tourists:
- Submit Documents at the Departure Port:
- Provide tax invoices, a copy of your passport, and a credit card.
- Choose Refund Method:
- Receive cash in UAE dirhams or have the refund credited to your card.
Essential Notes on VAT Refunds
- VAT refund in Dubai for tourist and in the UAE approvals are via devices at airports, seaports, or border ports.
- Tourists receive 85% of the VAT amount, with a deduction of AED 4.80 per tax-free tag.
- Planet’s eService supports the process in collaboration with the FTA.
For detailed information, refer to the FTA's "Guide to Tax-Free Shopping", which explains:
Eligibility criteria for tax-free shopping.
Goods are eligible for refunds.
Validation processes and timelines.
Refund collection points
Example for Tourists:
If you buy a luxury watch for AED 10,000, you pay AED 500 in VAT. By presenting your tax-free receipt and the watch at the airport, you can reclaim approximately AED 425, saving you a substantial amount.
As Tourists, you can easily enjoy the benefits of the UAE’s tax-free shopping, making your visit even more rewarding!
While business visitors and typical tourists are eligible for VAT refunds, the process differs as both parties fall under different schemes. The following details will help you understand better how to claim vat refund in UAE for business visitors.
What Is the VAT Refund Scheme for Business Visitors?
The Business Visitors Refund Scheme (BVRS) is a framework designed by the UAE’s Federal Tax Authority (FTA). It allows non-resident businesses to claim VAT refunds on business-related expenses. The scheme is particularly helpful for businesses attending conferences, exhibitions, or engaging in professional activities in the UAE.
The business must meet the following conditions to qualify for a refund:
- Non-Resident Business: The applicant must not have a place of establishment or a fixed establishment in the UAE or any other GCC country implementing VAT.
- No VAT Registration: The business must not be registered or required to register for VAT in the UAE.
- Reciprocity Agreement: The applicant’s home country must offer VAT refunds to UAE businesses under similar conditions.
Eligibility Criteria for VAT Refunds
companies must meet the following criteria To qualify for VAT refunds:
Non-Resident Business:
The applicant must not have a place of establishment in the UAE or any other GCC country where VAT is implemented.
No UAE VAT Registration:
The business must not be registered or required to register for VAT in the UAE.
Reciprocity Agreement:
The applicant’s home country must offer UAE businesses a similar VAT refund scheme.
What Expenses Are Eligible for Refunds?
- Accommodation: hotel stays for business purposes.
- Event Participation Fees: Costs for attending exhibitions, conferences, and seminars.
- Professional Services: Fees paid for consulting or other business services.
- Local Transportation: Transportation costs within the UAE related to business activities.
- Prepare Necessary Documents
- Copies of VAT invoices clearly show the VAT amount.
- Proof of payment for the incurred expenses.
- A valid business registration certificate from the applicant’s country.
. 3. Verification Process
- The FTA reviews the application to ensure compliance with eligibility criteria.
- Authorities may request Additional documents during this process.
- Submit a VAT Refund Application
- Register on the Federal Tax Authority (FTA) e-Services portal.
- Complete the VAT refund application form and attach all required documents.
- Ensure the application submission is within the specified timeframe (typically within 12 months of incurring the VAT).
- Receive the Refund
- Once approved, the refund will be processed and credited to the applicant’s bank account using the specified currency.
Example for Business Visitors
Imagine a UK-based company spending AED 40,000 on exhibition fees, hotel stays, and transportation during a business event in Dubai. It pays AED 2,000 in VAT. By submitting a claim through the BVRS, the company can recover AED 2,000, significantly reducing its operational costs.
Important Deadlines and Timelines
- You must submit VAT refund claims within 12 months from the transaction date.
- The FTA processes refunds within approximately 4 months of the application submission, provided all documentation is complete.
Common Mistakes to Avoid on How to Claim VAT Refund in UAE for Tourists and Business Visitors
- Incomplete Documentation: Missing or incorrect VAT invoices can delay or void refunds.
- Late Applications: You should submit all claims within the designated timeframe.
- Non-Eligible Expenses: Verify whether an expense qualifies for a VAT refund before submitting a claim.
Key Differences Between VAT Refunds for Tourists and Business Visitors
| Aspect | Tourists | Business Visitors |
|---|---|---|
| Eligibility | Non-residents, personal purchases | Non-resident businesses, business exp |
| Refund Process | At the airport | Online via FTA portal |
| Required Documents | Passport, tax-free receipts | Invoices, business registration proof |
| Processing Time | Immediate at the airport | Up to four months |
Why Choose NNCA for VAT Services?
The VAT refund process can be overwhelming, especially for first-time claimants. NNCA offers expert VAT services and consultation to simplify the process and ensure maximum refunds.
Our Expertise on How to Claim VAT Refund in UAE for Tourists and Business Visitors:
- We assess your eligibility and provide step-by-step assistance.
- Ensure all invoices and receipts meet FTA requirements.
- Let us handle the complexities while you focus on your travel or business.
Contact NNCA today for reliable VAT services. Whether you’re a tourist or a business visitor, our team will ensure your VAT refund experience is seamless and stress-free.
FAQs About VAT Refund in the UAE
1. Do tourists have to pay VAT in Dubai?
2. How much is a VAT refund in UAE?
3. How to claim VAT refund in UAE for tourists and business visitors?
4. What is the tourist tax in the UAE?
5. Do tourists get VAT refunds in the UAE?
6. How to claim a VAT refund?
7. How do you claim a VAT refund at Dubai airport?
8. How much VAT can I claim back?
9. Is VAT refundable in Dubai for business?
10. How to claim VAT refund UAE for business visitors?
11. What items qualify for VAT refunds?
12. Can I claim VAT back if I am self-employed?
13. Do businesses pay VAT on purchases?
Conclusion
Reclaiming VAT in the UAE offers significant financial benefits for tourists and business visitors. By understanding the eligibility criteria on how to claim VAT refund in UAE for tourists and business visitors, following the step-by-step process, and partnering with trusted experts like NNCA, you can ensure a hassle-free experience.
