VAT Refund for Tourists: A Guide to FTA Decision on Setting Time Limits
The UAE introduced Value Added Tax (VAT) refund for tourists on November 18, 2018, which allows tourists to reclaim the VAT incurred on goods purchased through approved tax-exempted stores registered with the Federal Tax Authority (FTA). The scheme has evolved over years with the FTA improving the systems and introducing timely updates. VAT consultants in Dubai can advise tourists and retailers to follow the updates to comply with the scheme. Recently, the FTA has set a new time limit for claiming VAT refunds by tourists which will be discussed in detail in the below article:
Time Limit for Claiming Refund
As per Article 68 of the UAE VAT and Law and Cabinet Decision No. 41 of 2018, tourists visiting the UAE are eligible to receive a refund on VAT incurred on purchases made in the country. The UAE VAT regulations also specify the detailed processes and requirements a person must follow to be eligible for its application. Tax agents in Dubai can help entities to understand the relevant procedures and conditions surrounding tax refunds by tourists.
However, the newly published FTA Decision No. 4 mandates that the operator of the Tax Refunds for Tourist Scheme must set a one-year limit for tourists to claim the VAT refund. The refund can be claimed through cash or a debit/credit card from the date of verification of the refund request. Most importantly, the time limit should be stated in the operator’s published list of terms and conditions.
Delivery of Tax Amounts to the Authority
The Decision further mandates that the operator of the Tax Refunds for Tourist Scheme must return any unclaimed VAT refunds to the FTA. However, such refunds must be delivered to the FTA within one month of the expiration of the time limit referred to. Relevant entities can consult with VAT consultants in Dubai to understand further about returning the unclaimed VAT refunds to the FTA.
Abrogation of Conflicting Provisions
The FTA Decision further mandates that all the previous legislations and communications issued by the Authority that are inconsistent with provisions of the current decision will be abrogated. Such legislation, including the earlier FTA Decision No. 4 of 2019 on Setting Time Limit for Cash Refunds of VAT by Tourists, will be replaced with the new Decision. The new Decision has come into effect on June 1st 2022. Tax agents in Dubai can advise taxable persons on the provisions of the new FTA Decision.
Conditions for Tourists in UAE to Apply for VAT Refund Scheme
The scope of the new FTA Decision is restricted to the setting of the time limit for Claiming Refund of VAT by Tourists. However, tourists visiting the UAE should also know about the conditions to apply for a VAT refund scheme. The key conditions are given below (However, it is advisable to talk to VAT consultants in Dubai before making any decision regarding the refunds):
- The goods should be purchased by the tourist from a retailer participating in the Tax Refunds for Tourist Scheme
- The tourists should purchase only the goods that are supplied within the borders of the UAE
- The tourists must not purchase goods that are excluded from the Refund Scheme of the FTA
- The tourist must have explicit intention to leave the UAE within 90 days from the date of supply with the purchased goods
- The purchased goods need to be exported out of the UAE within three months from the date of supply
- The purchase and export of goods must be carried out in line with the requirements and procedures of the FTA
Conditions for Retailers to Participate in the UAE VAT Refund Scheme
Retailers participating in the UAE VAT refund scheme for tourists must meet the following requirements. They can seek the assistance of tax agents in Dubai to ensure compliance with the FTA’s VAT refund scheme for tourists.
- The retailer should have carried out VAT registration in the UAE with the FTA
- The retailer should have a tax registration number (TRN)
- The supplier’s sale of goods should not be excluded from the scheme as determined by the FTA
- The retailer needs to submit a request to be part of the scheme as determined by the FTA
- The retailer should meet financial credit requirements specified by the operator of the scheme
- The retailer should be committed to filing VAT returns in the UAE and pay taxes promptly
How can VAT Consultants Help You?
The UAE VAT Refund scheme for tourists has proven to be a blessing for the retail and tourism industry. However, proper assistance from VAT consultants in Dubai such as Jitendra Chartered Accountants (JCA) is essential for ensuring compliance with FTA norms. JCA has a team of VAT consultants and an FTA-approved tax agent in Dubai who can help you to assess your present tax position, assist in obtaining VAT refunds, and prepare VAT Voluntary Disclosures and clarification requests, advise on the appropriate tax treatment etc. We can also represent you in front of the FTA as registered tax agents in Dubai. Get in touch with our tax consultants to discuss your specific requirements and decide the way forward.
