A Complete Guide to VAT Refund in Dubai

The shopping experience in Dubai is stunning and refreshing. There are large malls that are filled with the newest trends and local boutiques. However, remember that a value-added tax (VAT) is charged. The Federal Tax Authority (FTA) implemented a VAT in Dubai starting January 1st, 2018. Since then, several VAT refund programs have been put in place that allow approved nationals, international companies, and visitors to claim VAT Refund in Dubai.

You can claim a VAT Refund in Dubai before you finally check out at Dubai airport, as claiming VAT refund for tourists is not possible until you left the country. After reading this blog, you will understand where and how to receive your refund. With this guide, you will learn everything about the refund system in Dubai to make the most out of it. 

What is a VAT Refund in Dubai? 

Value Added Tax or VAT is a type of tax that is added to the cost of goods and services at each and every stage of production. While VAT is charged in almost every country, however Tax Free Dubai is popular among tourists for providing VAT refund system. Dubai VAT refund allows employees and businesses to reclaim VAT paid on commodities, accommodation, or services rendered on eligible expenses when input tax is more than the output tax in a tax period. 

A tax refund of up to 85% can be claimed. However, tourists are charged AED 4.80 per receipt which is tagless. Each tourist is limited to a refund of AED 35,000 . Refunds can be processed in cash within the limit, as well as through credit cards, WeChat, or paid back to the user’s preferred account. In November 2018, the government of Dubai along with Federal Tax Authority (FTA) approved a VAT refund for tourists. This refund enables the tourists to claim back VAT on certain goods bought while in the country. This was made possible after single payment system was enacted after implementation of a 5% VAT in Dubai. Moreover, tax refund schemes for tourists are only applicable to sellers who are part of the system. 

Benefits of VAT Refund System in Dubai 

A VAT refund in Dubai for tourist online or offline can be claimed on certain goods to encourage retail tourism, and help eligible travellers save money. Popular items include, but are not limited to, designer apparel, electronics and jewellery. Nonetheless, it is aimed to be simple to use for tourists, hence it adheres to international practices.  

Let us have a look at Dubai VAT Refund System: 

Feature	Details
VAT Rate	5%
Eligible Purchases	Goods intended for export by tourists (luxury items, electronics, etc.)
Non-Eligible Purchases	Services, hotel stays, meals, consumables
Refund Mechanism	Digital tax-free shopping service
Processing Fee Deducted	AED 4.80 per tax-free tag
Refund Points	Airports, ports, land borders

It’s not only ‘the’ Dubai Real Estate factor that attracts millions but few other important factors that include but not limited to Tax Free Dubai and VAT refund system that attracts people across the globe to visit Dubai either as a traveller or settle in Dubai as a resident. This refund system of Dubai is beneficial in several ways that includes: 

•    Quick and Efficient Automated System: A fully digitalized system ensures quick and error-free quick processing 
•    Aligning with the Global Standards: The refund system aligns with global tax refund practices, that makes sure that tourists experience a familiar process
•    A Major Boost to Tourism Sector: Dubai is famous for its state of the art architectural marvels that to a large extent attracts tourists from across the globe. And with an efficient VAT system tourists are more inclined towards luxury shopping which is more affordable in Dubai than in other countries. 

While, we are going through the deep analysis of benefits of VAT Refund in Dubai, tourists must be aware about the goods not eligible for VAT refund: 

•    Aircraft, motor vehicles and boats
•    Products that have been consumed partially or fully in the country or any Implementing State in the GCC
•    Goods that tourists don’t have on hand at the time of their departure from Dubai 

To ensure proper process of validations for goods that are eligible for refunds it is advisable to leave for airport with enough time before departure. 

Dubai Airport VAT Refund Eligibility 

Before we dig deeper into the process and time required to claim the refund, we must know about the VAT Refund Eligibility: 

•    Non- Resident Eligibility: In order to apply for the VAT Refund you must be a non-resident of the UAE or any other GCC Country. 
•    Minimum Shopping Amount: The total amount spent on a single transaction must not be less than AED 250
•    Time Limit to Submit Request: You must submit your VAT Refund request within 3 months or 90 days from the date of purchase 
•    Goods Not Consumed: Items must not have been consumed or used in the UAE.
•    Items that are not eligible: Vehicles, boats, and aircraft, and goods purchased through online mode are not eligible for VAT Refunds. 

Tax Free Dubai offers tourists VAT refunds when purchasing products from Dubai’s participating retailers, which can be claimed upon leaving the country. Refundable retailers can be easily spotted as they have the ‘Tax-Free’ sign. It is important to note that goods purchased from these retailers must be taken out of the country within 90 days. For one to qualify for VAT refund, the minimum spend must be above 250 AED. 

If you have smaller purchases, it is advisable to accumulate them at a single store for an easy refund. Remember to claim your VAT refund at the payment window. Claiming refunds at different stores is not advised, as most will not refund VAT without being asked first. The cashier will then ask you for your passport and scan it into the machine. If you are not in possession of your physical passport, having a soft copy will suffice. 

Steps to Follow at Dubai Airport VAT Refund Desk: 

From investors interested in investing in Off Plan Property in Dubai to Dubai Real Estate lovers who have just visited the city of Gold to experience the wonders of Dubai must follow the below mentioned steps at Dubai Airport to claim for VAT Refund: 

•    Validate Your Purchase: If you choose to use a self-service kiosk or a validation desk, this will ensure that you can validate your purchases before checking in for your flight. Self-Service Kiosks are available at all three terminals of Dubai Airport

•    Documents Required: Remember to bring your passport, boarding pass, original tax invoice(s), tax-free tag(s) and tagged goods as proof of purchase. When you show the tax invoice to the officials, bear in mind that your name must be the same as your travel document.

•    Inspection of Goods by Staff: In some cases, staff may demand for inspection of goods before finally processing your refund.

Choose Your Refund Method

Cash withdrawal: The cash will be ready immediately at the participating forex vendors after passport check.

Credit/Debit Card: Refunds are processed within nine days on average.

Digital Wallets: Digital refunds are possible through options such as WeChat Pay.

Locations to Claim VAT Refund in Dubai 

Airports: Dubai International (Terminals 1, 2, 3, and 3 Business), Abu Dhabi International (Common area between all terminals), Al Maktoum, Sharjah, Al Ain, Ras Al Khaimah, Al Fujairah.

Seaports: Port Zayed (Abu Dhabi), Port Rashid (Dubai), Port Khalid (Sharjah), Fujairah Port (Fujairah).

Land Borders: Al Ghuwaifat (Saudi Arabia border), Al Hili Al Ain (Oman border), Al Madeef Al Ain (Oman border), Hatta (Oman border), Khatmat Malaha (Oman border).

VAT Refund Process for Construction of a New Building

Since Dubai is famous for its real estate sector, we must get an ins-short view of VAT Refund Process for constructions of a new building. 

• Prepare Required Documentation: Collect all invoices and other relevant documents to support the eligible expenses like building materials and contractor services such as engineering services, excavation, plumbing etc.
• Obtain the Refund Form: Get the VAT refundable form for UAE nationals from the FTA portal.
• Complete the Form: Fill in all required fields in the form regarding the claimable expenditure and supporting papers. You do not need an FTA account for this claim.
• Wait for FTA Review: The authority will examine your application and inform you if the claim is approved or rejected. If the claim is approved, the refund will be deposited into your account within 5 business days after the approval.

For more details on new off plan property in Dubai you can contact Real Estate Agents in Dubai. 

VAT Refund Schemes in Dubai 

Scheme	Eligible Category	Reason
VAT Refund for Foreign Businesses	Foreign Business	To Allow Foreign Businesses to Recover VAT on Business Expenses Incurred in UAE
VAT Refund for UAE Nationals Building New Residences	UAE Nationals Building New Residences	To Support Nationals with Construction Expenses on New Homes
Electronic Tax Refund Scheme for  Tourists	Tourists	To Encourage Tourism by Offering Vat Refunds on Shopping

Conclusion

One of the enjoyable benefits a tourist will find when shopping in Dubai is the VAT refund in Dubai scheme by government that allows them to claim Value Added Tax on qualifying purchases. This refund system is extremely easy to access since all the tourist has to do is meet the eligibility requirements, follow the outlined steps, and gather the needed documents for hassle-free reimbursement. The system allows refunds to be paid back in a variety of ways such as cash, credit card, or even through the latest digital payment methods. 

This technology aided improvement makes Dubai favourable when it comes to shopping. So be sure to make the most out of the VAT Refund scheme as well as enjoy your trip to Dubai, making it a memorable experience while your wallet stays happy.