Tourist visitors will be able to claim tax refunds on their purchases within minutes as part of a new digital system for the Tax Refunds for Tourists Scheme – but may be subject to secondary checks as they exit the country, the company hired to operate the digital system for the UAE’s Tax Refunds for Tourists Scheme has said.
The Federal Tax Authority (FTA) announced at a press conference in Dubai that the digital system for the Tax Refunds for Tourists Scheme will be ready to issue and process VAT refund claims for eligible tourists to recover tax incurred on their purchases from this week at Abu Dhabi, Dubai and Sharjah International Airports.
The FTA said that more than 4,500 retailers are now linked to international payments specialist Planet’s electronic system, with the number expected to rise next month.
Under the scheme, a tourist can request a tax free purchase at a participating outlet, and must present a valid passport.
A shop assistant captures the tourist’s information using Planet’s system. The shop assistant then places a ‘Tax Free’ tag on the back of the sales receipt. The tourist must validate the transaction at the airport when exiting the country.
The FTA said that tourists would receive 85% of the total VAT amount paid, minus a fee of AED4.80 per ‘Tax Free tag’.
“We’re looking to try and get the highest number – maybe 90 percent – of the people who interact in the store to get the refund in the end,” Gary Byrne, director of New Markets & Group Strategic Partnerships at Planet, told Arabian Business.
“It should be minutes in the store, probably even down to two minutes maximum, and it should be again minutes in the airport.”
Easy process
Byrne added that the provider’s goal is to make the process “easy” and to be more successful than other global tourist tax refund processes. He added that Planet has 100 – 120 staff members dedicated to processing the refunds across UAE airports.
“In some countries, the success ratio from what happens in the store to refunding can be sometimes quite low depending on all the steps that happen in between,” he said. “Here we’re trying to make the steps lower.”
Byrne added that the processing should “not interfere” drastically with the tourist’s journey.
“You shouldn’t have to go (much) earlier (to the airport) than you normally would,” he said. “We always advise to allow a little more time if you have to do the validation – 15 to 30 minutes.”
Checks
However, exiting tourists could be subject to checks to make sure they are complying with the regulations.
An official from the FTA explained that goods that “are not accompanied by the tourist at the time of leaving the state” and goods that have “been consumed in full or in part”, such as a box of chocolates or a bottle of perfume, would be excluded from refund.
“If a tourist goes and buys a box of chocolates and eats half of it, then he won’t be able to get a refund for the tax on the box of chocolates,” the FTA official said.
“Every single transaction may be subject to a secondary check,” Byrne added. “(For example), chocolates are a consumable item. Therefore, there is a chance that somebody may have consumed part of it… if they’ve taken half of them while they’re sitting in their hotel room, they can’t get a refund. So what will happen is that may be selected for a secondary check and then it (the refund) could be rejected.”
Most advanced of its kind
FTA director general Khalid Ali Al Bustani called the scheme’s digital system “the most advanced of its kind” and said it was developed following thorough studies to meet the highest quality standards and best practices.
He said the “clear, transparent and accurate criteria” for the procedures to be followed to reclaim VAT for tourists “strengthens the UAE’s status as a leading international tourist destination”.
Byrne added that amongst the shops registering for the scheme he noted major interest from gold, diamonds and electronics merchants.
Only invoices issued by retailers who are registered for the scheme and connected to Planet’s system are eligible for a refund by tourists. Both the FTA and Planet declined to name any retailers that are already linked to Planet’s system.
An FTA official added that to participate in the scheme a merchant must be registered for tax and have a TRN. Companies that apply to join the scheme also need to pass a credit check that is done by the operator.
“They (shops) have (to have) a credit review… because there is an obligation for the shop to pay the money they refund to tourists,” the FTA official said.
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