You are a tourist and have to buy goods or tours from the visiting country. When you buy a product apart from sales tax, you have to pay value-added tax on the purchase of the product or services. But you don’t know what a value-added tax is. Let’s have some information about it and then we will tell you how can you reclaim you value added tax amount from the goods or services purchased in United Arab Emirates.
- What is Value-added Tax.
- Tax-free shopping.
- VAT refund for tourists in UAE.
- How can you get your VAT refund?
- Are you eligible for a VAT refund?
- Self Service VAT refund Kiosk
- How much purchasing will enter you for a VAT refund?
What is VAT
Value added tax (VAT) refers to the amount of money added to the total cost of a product when some valuable substance is added to the product. This tax is applicable in most of the countries on their products which are not sold in raw form. Value-added itself means that we get improved quality product with the addition of substances.
Economists consider VAT as a burden on the people while it adds to the income of government. It is different from sales tax which a customer pays when he purchases the product. While VAT is applied at each manufacturing step in during which the quality of the product is enhanced. USA does not imply VAT on its manufactured goods.
How Much is the VAT in UAE
UAE introduced VAT on its products and services in 2018 for the first time. And it applies to all people whether they are resident of the United Arab Emirates or tourists. The amount of VAT is 5 percent. Though it is a burden on the tourists and locals, it will help the government provide better facilities to its residents.
UAE government has set some rules for the smooth working of this system. All the businessmen need to register their business with the UAE government, and after a year with proper tax, paying can get their VAT refund. This is also applicable to foreign people in the industry. In November 2018, the UAE government announced VAT refund for tourist also. But there are some procedures you need to aware of and follow them to get back your money.
First of all, we need to know about the working of the tax refund system. The VAT refund is an electronic refund system. The retailers dealing with goods or services sale and purchase need to get themselves registered in this refund system. This is the first step, so the data of their products sale is recorded. The registered retailers need to hold posters for tourist guidance. Tourists will only get a refund if they purchased the product from a certified retailer shop. And you get your refund upon leaving the country.
Tax-free shopping implies to those tourists who purchased goods from registered retailer shops in Dubai according to the rules of the UAE government to export products. These customers get their VAT amount refund when they leave the country.
VAT refund Office Location at Dubai International Airport
Tourists now have an easy way to claim back VAT before departing the UAE, thanks to the launch of self-service kiosks across the country. At Dubai International Airport Terminal 3 is the location to carry out the VAT refund procedure.
Points at Terminal 3 for VAT refund
If you are traveling in first class or business class, you can go the VAT refund office located close to the luggage assembly counter which is present at the entrance of the terminal.
For passengers traveling in economy class, the location of the VAT refund office is between T3 airside, close to the security checkpoint and APM platform.
How to claim a VAT refund?
This is an electronic system, and no human involvement is done. All you need is to provide your details of the purchased goods at the designated airport terminals and present them to the system. When you purchase a good at a registered retailer shop, they record your information in electronic system and give you a VAT refund tag. You provide this information to the systme. It will read and validate the data. Once your data get validated you can claim refund as cash or transfer to your account. Once your information is certified an operator at the Foreign Exchange office will give you your money.
Are you eligible for a VAT refund?
You should meet the following criteria to become eligible for a VAT refund.
- Tourist must be above the age of 18 years.
- You purchased the goods from the registered retailer shop in Dubai.
- None of the airport staff are allowed to carry the goods with themselves.
- You must be leaving the country within three months after the purchase of goods.
- The items purchase should be included in VAT. VAT exempted items cannot claim for refund.
Self Service VAT refund Kiosk
Dubai government has taken one step ahead by placing self-serving Kiosks at different locations in the airport for speeding up the process of VAT refund. Tourists who are not aware how to use the technology can take help from the customer care representatives who are available in nearby offices. These machines are installed in both airports; Dubai International Airport and Al Maktoum International Airport at various locations.
The minimum amount for a refund a tourist can claim is on purchase of Dh250. The tourists get 85 percent of their tax back as refund while the remaining 15 percent is transferred to Planet account as administration fee. The planet is the company manufacturing and operating Kiosk machines. They manage the money refund system across the globe.
If you are leaving the country through the seaport, no need to worry about, you can still get your tourist VAT refund. All you need to do is visit the nearest Kiosk or tourist refund office. Fill the application form and get your refund either as cash or amount transferred to your account by the operator.
UAE government has prepared a plan to connect all the registered retailers electronically and install VAT refund systems at all airports in UAE and at seaports too to aid the tourists with their process of VAT refund.
Although the government is trying to provide a smooth working process for the VAT refund system tourists may face some difficulties too. VAT refund system needs the details of the buyer from his/her passport for allotment of VAT refund tag. However, accidentally if a tourist is not having a passport, he cannot claim for refund. Apart from that, Airports may observe long queues of people standing at the VAT refund counter or Kiosk machine.