Dubai Duty Free is hoping products sold at Dubai airports will remain exempted from value-added tax (VAT), according to a senior company executive.
The UAE is likely to introduce five percent VAT from January 2018, with the Ministry of Finance already holding workshops to educate businesses on the implications of the new tax.
“It is our view that VAT 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 Arabian Business.
Discussions are under way both within the airport and with external consultants for a clear statement of exemption for goods and services sold in Dubai airports, he said.
Besides, the airport retailer, a subsidiary of Investment Corporation of Dubai, is also working with Dubai Airports and external consultants to “better understand” the tax regime before any formal consultation with the Finance Ministry.
However, Creed said DDF has not tried to calculate the impact of the additional tax on its sales as greater clarity is needed on the imposition of VAT with regards to its start date, tax rate, categories that will or will not be exempted in the domestic market, stance of the other Gulf countries and the degree of compliance with the tax regime in the domestic market.
“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,” he said.
DDF reported sales of $1.8 billion (AED6.6 billion) last year, registering 27.1 million sale transactions at Dubai International Airport and Al Maktoum International.
In March, Finance Ministry officials told tax consultants at the first VAT briefing about the possibility of a tourist refund scheme.
Creed said that although he continues to await confirmation, he reiterated the likelihood of a refund facility to be in place for VAT paid on domestic purchases by tourists.
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