The United Arab Emirates will be refunding its 5% value added tax (VAT) on all goods and services to millions of tourists starting November, according to the Federal Tax Authority (FTA).
The VAT refund system will initially be available at the three main UAE airports in Abudhabi, Dubai, and Sharjah, but will be installed at 12 exit points, including land borders and ports, soon after, by the end of the year 2018.
The minimum amount that makes tourists eligible to claim their VAT refund will be 250 dirhams, according to the guidelines issued by the FTA and Tourist Refund Scheme operator, Planet.
Tax-free shopping will be possible for all tourists above 18 years-old, Planet said.
Until December 16, the three airports will be the only points at which VAT could be refunded, but from that date onwards, nine more locations will be added, which are: Al Maktoum Airport, AbuDhabi Port Zayed, Al Ain Airport, Al Ain land border, Fujairah Airport, Ras Al Khaimah Airport, Al Ghuwaifat land border, Hatta land border, and Dubai Mina Rashid Harbor, according to Planet’s website.
After claiming their VAT, tourists will receive 85% of the claimed amount, following a deduction of 15% as an administration fee.
Tourist spending in the UAE is projected to increase from 154 billion dirhams (almost 42 billion US dollars) in 2017 to 205.5 billion dirhams by 2022, according to Dubai Chamber of Commerce and Industry study.
In Dubai alone, a study by Mastercard had estimated visitor spending at 104.6 billion dirhams last year, a growth of 10 per cent.
According to the annual Mastercard Destination Cities Index, Dubai outpaced all other cities in visitors’ spending in 2016.
The UAE, along with Saudi Arabia, implemented a five per cent VAT on all goods and services from January 1, 2018. Bahrain and other GCC countries will implement VAT as part of GCC framework in 2018-2019.