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The United Arab Emirates has unveiled a pioneering system enabling tourists to obtain Value Added Tax (VAT) refunds on e-commerce purchases made during their stay. This initiative, launched by the Federal Tax Authority (FTA) in collaboration with Planet, the authorized operator of the VAT refund scheme, aims to enhance the UAE’s appeal as a premier destination for both tourism and online shopping.
Under this new system, tourists can request VAT refunds directly through registered e-commerce platforms by providing their travel document details at the time of purchase, prior to the shipment of their orders. The refund process is finalized once the tourist’s identity is verified during delivery or order fulfillment. This streamlined approach eliminates the need for physical paperwork, offering a seamless and efficient experience for international visitors.
Khalid Al Bustani, Director General of the FTA, emphasized that this development reflects the UAE’s commitment to digital transformation and reinforces its status as a global tourism hub. He stated that the VAT refund procedures are processed smoothly, quickly, and efficiently, from the moment of purchase until the refund is completed when the tourist departs the country.
The UAE initially introduced a 5% VAT on most goods and services in January 2018 as part of its economic diversification strategy. In November of the same year, the country launched a VAT refund scheme for tourists, allowing those who spend at least AED 250 (approximately $68) on purchases to claim refunds at designated outlets before leaving the country. The introduction of the e-commerce VAT refund system marks a significant expansion of this scheme, accommodating the growing trend of online shopping among travelers.
This initiative is part of a broader shift in the UAE’s tax landscape, as the country implements reforms to diversify its revenue sources and reduce reliance on hydrocarbons. In June 2023, the UAE implemented a federal corporate tax at a standard rate of 9% for financial years starting on or after June 1, 2023. Additionally, starting from financial years beginning on or after January 1, 2025, large multinational enterprises will be subject to a 15% domestic minimum top-up tax on profits.
The FTA has ensured that the new e-commerce VAT refund system is fully integrated with all ports of entry and exit from the UAE, facilitating a hassle-free experience for tourists. To be eligible for a refund, tourists must be at least 18 years old and make purchases from retailers participating in the ‘Tax Refund for Tourists’ scheme. Goods must be exported within 90 days from the date of supply, and the minimum purchase amount to qualify for a refund is AED 250. Refunds are not applicable on goods that have been consumed, fully or partly, in the UAE, and the tourist must physically present the tax invoice, ‘tax-free’ tags, and relevant goods at the point of exit.
The UAE’s commitment to enhancing the tourist experience through digital innovation is evident in this latest development. By simplifying the VAT refund process for online purchases, the country not only boosts its tourism sector but also strengthens its position as a leading e-commerce hub in the region. This move is expected to attract more international visitors, offering them greater convenience and value during their stay in the Emirates.
As the global tourism industry becomes increasingly competitive, the UAE’s proactive approach in adopting digital solutions and streamlining processes sets it apart as a forward-thinking destination. The introduction of the e-commerce VAT refund system is a testament to the country’s dedication to providing exceptional experiences for tourists, aligning with its broader economic goals and vision for the future.
Tourists planning to visit the UAE can look forward to a more integrated and user-friendly shopping experience, both online and offline, with the assurance that they can reclaim VAT on eligible purchases with ease. This initiative not only enhances consumer confidence but also encourages increased spending, contributing to the overall growth and sustainability of the UAE’s economy.
The UAE’s launch of the e-commerce VAT refund system for tourists represents a significant milestone in the country’s efforts to integrate digital technology into its economic framework. By facilitating seamless VAT refunds on online purchases, the UAE continues to lead the way in enhancing the synergy between tourism and e-commerce, setting a benchmark for other nations to follow.
