Does UAE’s VAT Have an Effect on Tourists?

To some extend VAT has had an effect on tourists to date. The UAE (along with other states across the Gulf Cooperation Council (GCC) region) started a 5% VAT on non-essential goods and services on January 2018. Therefore, tourists in the UAE also pay VAT at the point of sale.

However, recently, the UAE Cabinet decided to implement the value added tax (VAT) refund system for tourists, to be implemented at the beginning of October 2018 in cooperation with an international specialized company in tax recovery services.

What this means is that “non-resident tourists may refund VAT on purchases made at participating retailers, provided that such goods are not exempt from the tax system, through designated refund outlets,” explains ArabianBusiness.com.

The Federal Tax Authority (FTA) approved a refund scheme for tourists under which outlets and points of sales across the UAE will be connected to the refund systems so that visitors can get a tax refund after submitting documents and providing evidence as required to claim money back.

“The retailers will be able to directly issue refunds to tourists when they are buying the goods subject to the guidelines provided by the FTA.” Eligible retailers would be able to register for the Tax Refund Scheme from September 10. Tourists claim their refund at a designated refund processing center through an electronic system.

This is good news for the tourists visiting the UAE who will be able to claim a refund on the five per cent value added tax (VAT) they pay for purchases made on goods at “participating retailers” whilst visiting the country. Because tourism contributes heavily to UAE’s economy, the Cabinet said that the move was important to ensure the continuous growth of this important sector.

As UAE is now not a VAT free country, it’s important to know about VAT Return and how everyone can file it.

There are also news for VAT on gold and jewelry. “Jewelry is not just a commodity – it’s a luxury good,” and that’s why people invest in it. Obviously, tourists buy gold in Dubai due to its competitive prices. Dubai’s famous Gold Souk, which is attractive for its purity, standard, variety and competitive pricing compared to other markets, is one of the largest retail gold marketplaces in the world. (Don’t miss out on this year’s #JewelleryShowDXB! – VOD DUBAI INTERNATIONAL, 14 – 17 November 2018) FTA said that the recently introduced VAT reverse charge mechanism on precious items such as gold and diamond is only applicable to commercial transactions/trading of these items between registered dealers. The rising number of tourists, however, is still expected to drive jewelry sales, even more so now with the VAT refund scheme.

Does UAE’s VAT Have an Effect on Tourists?

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