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VAT in the United Arab Emirates

By October 29, 2018July 10th, 2021No Comments

After the implementation of its first consumption tax in the United Arab Emirates (UAE), the Federal Tax Authority (FTA) is continuing to make efforts to make compliance easy for businesses…

After the implementation of its first consumption tax in the United Arab Emirates (UAE), the Federal Tax Authority (FTA) is continuing to make efforts to make compliance easy for businesses.

Most recent development, The UAE FTA has confirmed VAT Tourist Refund Scheme (TRS) wef 1st November 2018. FTA has selected “Planet” as its operator for TRS.

To qualify for a Tax Refund following conditions should be met:

  • Goods must be supplied to Tourist within the UAE
  • Tourist to leave the country with supplies within 90 days from the date of supply or
  • Goods to be exported from the UAE by tourist within 3 months of the date of supply
  • The goods must have been purchased from a retailer registered in the system and the purchase process must meet the requirements as defined by the authority.
  • The goods must not be excepted from refund.

Key Features of TRS:

  • Non UAE residents above 18 years old will be eligible for Tax Free Shopping.
  • Minimum limit of purchase for each invoice is AED 250 to claim VAT refund.
  • System initially available at Abu Dhabi, Dubai and Sharjah airports and by year-end, it will be extended to 12 exit points.
  • Tourists to validate Tax Free forms at exit points through Planet kiosk.
  • Tourists could be asked to present their goods to confirm they are unused.
  • Only owner of the passport under which the tax free forms are registered will be entitled to collect the refund.
  • Tourists will receive 85 per cent of the total VAT amount
  • An administration fee of AED 4.80 per tax-free form to be charged.
  • Tourists’ tax free tag needs to be validated within 90 days of the purchase.
  • If receipts are not validated within 90 days, the tax free tag expires and VAT cannot be claimed.

Example, if a tourist buys gift items of AED 225 from a store and spends another AED 525 on buying electronics from another store, tourist is eligible to claim AED 25 of VAT paid on purchase of AED 525 only and not on the purchase of gift items of AED 225.

Refund of VAT on purchase of AED 525, tourist will get AED 16.45 as VAT refund under TRS.

More detail on TRS can be accessed through https://www.tax.gov.ae/pdf/Cabinet-Decision-No-(41)-of-2018-on-Tax-Refunds-for-Tourist-Scheme.pdf

The above information was kindly provided by Manoj.  If you need any further information you can contact Manoj, email to: c4camanoj@gmail.com.

About Manoj:

MANOJ AGARWAL, CA, AFA (UK), MIPA (Australia), AAIA (UK), AFTA (UK) Tax & Commercial Professional, He is a writer, thinker and prominent speaker on Indirect Taxes and participated in various workshops and training sessions on UAE & GCC VAT. He is actively writing blogs, articles and eBooks on the UAE VAT Laws, Tax Procedures & Regulations etc. He is currently working as DGM – Finance with Dabur International Limited, Dubai, UAE.