Airport sales may get VAT exemption
Dubai Duty Free expects new consumption tax will not be charged on products sold at airports.
dubai — The UAE will introduce value-added tax (VAT) from January 1 next year at a five per cent standard rate. A senior official at Dubai Duty Free hopes the new consumption tax will not be charged on products sold at Dubai airports.
“It is the view of Dubai Duty Free that VAT and excise tax will not be applicable on products sold airside at Dubai’s airports as they are being sold to passengers leaving the emirate,” Bernard Creed, senior vice-president — finance, Dubai Duty Free, told Khaleej Times.
Dubai Duty Free is considered one of the world’s biggest travel retail operators with a presence at Dubai International and Al Maktoum International. The airport retail operator, which currently employs more than 5,000 workers, registered 27.1 million transactions to post a record Dh6.6 billion ($1.85 billion) sales last year compared to Dh73.4 million ($20 million) in 1983 when it launched its operations.
Officials at Dubai Duty Free are confident of getting more clarity on VAT in the coming days and said retail sales at Dubai airports would not suffer due to introduction of the new tax. They were even confident that Dubai Duty Free sales may cross the $2 billion sales mark this year ahead of the new levy.
“Discussions are underway both within the airport and with external consultants for a clear statement of exemption for goods and services sold in Dubai Airport. Until there is greater clarity on the above issues, it is not possible to reach any meaningful conclusion on the impact of taxes on our business,” Creed said.
On January 1, 2018, the UAE will join the club of nearly 150 nations by implementing a five per cent VAT in the country to diversify revenue sources. VAT is expected to generate up to Dh12 billion revenue in its first year of introduction, and may generate between Dh18 billion and Dh20 billion in 2019.
The Ministry of Finance has already launched a programme to host VAT awareness workshops for businesses across the country. However, there is still no clarity on VAT application on different goods and services as well as its refund to visitors and tourists at the airport.
— muzaffarrizvi@khaleejtimes.com