From Sunday tourists can claim back 85 per cent of VAT paid

Tourists will be able to claim 85 per cent of their VAT on goods bought in the UAE from Sunday.

The remaining 15 per cent will be charged in administration fees to Planet, the global operator of the refund system.

Yesterday, UAE Federal Tax Authority director general Khalid Al Bustani said more than 4,500 companies had registered to the tourist tax refund scheme.

Mr Al Bustani said the figure was expected to rise to 6,000 by the end of the year and could be as high as 10,000 by the end of next year.

“The FTA is keen to contribute to increasing tourism attractiveness, encouraging domestic trade and establishing the UAE as a central trading hub in the region.”

Tourists can claim a refund within 90 days of purchase. They can claim up to Dh10,000 in cash but there is no limit on credit card refunds. “The Dh10,000 cash refund is high compared to what countries across the world offer,” Mr Al Bustani said.

To qualify for the refund, tourists must be at least 18 years old and must intend to leave the UAE within three months of the purchase along with the goods they have bought.

VAT was introduced in the UAE this year as part of plans to diversify the country’s economy away from oil.

Tourists will only be able to claim refunds on goods that have been bought from companies that have signed up to the scheme.

To be eligible, companies must undergo a credit assessment because they will have to refund the VAT to the government.

Crew members on flights or planes that are leaving the country are not eligible for VAT refunds.

Goods such as motor vehicles, boats and aircraft are not included in the refund scheme. Similarly, any goods that have been fully, or partly, consumed in the UAE are not eligible for a refund.

Tourists can apply for a taxfree purchase in participating stores. When the shop enters their information and they have provided a valid passport to prove they are not a resident, they will be given a taxfree tag on the back of their receipt and a digital form will be created.

Tourists can then claim their tax refund at the point of exit. The only valid points of exit are Dubai, Abu Dhabi and Sharjah airports but this will be extended to other ports next month.

There is a minimum spending limit of Dh250 for goods to be eligible for the scheme. There will also be a Dh4.50 charge for each tax-free tag that is presented for a refund.

The 15 per cent of the transaction that is paid as commission to the tax refund agency is common practice in many countries with various agencies charging differing amounts.

Planet operates in 58 countries.