IN A move meant to further boost tourism the United Arab Emirates cabinet has announced that tourists will be eligible to a refund of five percent of the value added tax (VAT) they paid during their visit to the country.
According to the UAE cabinet the refund system for tourists will be implemented on the fourth quarter of 2018 but the VAT refund will refund will only apply to purchases made on participating retailers.
Based on executive regulations on VAT released last year, the goods must be supplied to the visitor while he is in the country at the time of the purchase to qualify for the VAT refund.
Under the same rules, some goods may be exempted. However, the Federal Tax Authority has yet to publish the list of items exempted from the VAT refund scheme.
A statement released by the cabinet said the refund mechanism will be overseen by an international firm that specialises in tax recovery services, linking retail outlets and designated tax refund points.
So far there is no information yet as to which company has been selected to administer the VAT refund mechanisms
In April, the FTA said that it expected a company to be “selected soon” to handle the VAT refund process.
“We are waiting for the final approvals in order to finalize the contract with the operator,” Khalid Al Bustani, director-general of the FTA had said earlier.
The cabinet also clarified that the refund system will only apply to those travelling to the UAE from outside Gulf Cooperation Council (GCC) countries.
Tourism is a major boost to UAE’s economy. Nearly 16 million people visited Dubai in 2017, while a further 123 million passengers travelled through the country’s airports for the same year.
In 2017 the tourism sector contributed 11.3 per cent to the UAE’s GDP, equivalent to Dh154.1 billion.