UAE VAT Refund Now Includes Online Shopping for Tourists

Tourists visiting the UAE will soon be able to claim a full VAT refund on their online purchases, adding to the existing provision for in-store purchases. This progressive move is expected to boost online sales across sectors like fashion, electronics, and tech gadgets, particularly during peak tourist seasons. The VAT rate in the UAE is set at 5%, with the refund policy for physical stores introduced in late 2018.

 

Key Beneficiaries

E-commerce platforms such as Noon and Amazon, alongside physical retailers with online operations, stand to benefit significantly. This initiative provides retailers with a chance to attract more tourist spending by running targeted sales and promotions online, matching their in-store offers.

 

How the VAT Refund Works

Once implemented, tourists can claim VAT refunds for online purchases made during their stay in the UAE. To facilitate this, retailers will need systems capable of initiating tax-free transactions at checkout, integrating with the tax refund operator, Planet, which handles refunds for physical store purchases.

 

GCC Visitors to Gain

Tourists from neighboring Gulf countries are expected to be among the primary beneficiaries. With Saudi Arabia’s higher VAT rate of 15%, the UAE's lower rate and VAT refund scheme give it a competitive edge in attracting more visitors.

 

Retailer Preparation

Retailers already participating in the tax-free system for in-store purchases may need minimal system adjustments to integrate online refunds. Key requirements include:

• Capturing tourist details during transactions

• Ensuring identity verification during delivery

• Denying tax-free status if the recipient is not physically present

This streamlined process ensures that tourists can enjoy the same convenience online as they do in-store.

 

Physical Store Refund Process

For in-store purchases, tourists must spend a minimum of AED 250 to qualify for a VAT refund. The process involves:

1. Presenting a valid travel document for scanning.

2. Capturing tourist details via Planet’s system.

3. Tagging the receipt with a ‘tax-free’ label.

4. Validating the transaction at the airport within 90 days of purchase.

 

Opportunities for Retailers

With this initiative, UAE retailers have a unique opportunity to capitalize on tourist spending. Extending online promotions, especially during peak seasons, can drive both digital and in-store sales, further enhancing the UAE’s appeal as a top shopping destination.

 

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