Value added tax in the United Arab Emirates is 5%. It is charged when purchasing many goods and services. Tourists and non-residents of the country can return part of the VAT for the purchase if it was made during a visit to the territory of the UAE. Within the framework of the Federal Tax Administration program, it is possible to refund 85% of the total amount of tax paid. For example, if the cost of the goods is 500 AED, then the VAT will be 25 AED, and the refund will be 21.25 AED. Let’s consider the features of VAT refund in Dubai.
What is VAT (VAT)
VAT is a tax that must be paid from the cost of the goods. Example: the plant produced a pot and sold it to a trading company – at this point, the production company pays the tax to the state. Then the company sold the pot to the store – now it has to pay VAT. The store sold to the customer – now it’s his turn to pay tax to the state.
An important point is that companies do not pay this tax in full. Their task is to pay the difference between received from their buyer and outgoing to their supplier.
Payment of tax is mandatory if the product was purchased in this country. When exporting products outside the state, they are not taxed.
What restrictions on VAT refund can you face?
To participate in the program, you need:
- be a non-resident of the Emirates;
- reach the age of 18;
- buy something in an accredited store for at least 250 AED;
- get the Tax Free label;
- to take the products out of the country in a closed form within 90 days;
- not to be a member of aircraft crews, etc.;
The refund can be non-cash and in cash. For the second option, there is a limit – a maximum of 7000 AED per day.
Some items are not included in the refund program. We are talking about:
- alcoholic beverages;
- pork products.
Also, a refund cannot be issued if you purchased the goods in large quantities to resell.
How do I make purchases in order to return part of the VAT later?
Before you buy anything, check with the store if it is possible for them to issue tax free. Usually on such outlets you can see a small green sign with a white text of this inscription. The following are simple steps:
- Registration of the international tax free system.
- Presenting a passport for scanning and adding it to the payment system.
- Printing and attaching a tax free receipt (the seller’s task) to the back of the receipt.
- Creating an electronic form for registration when leaving the country (the seller’s task).
- Making a refund within 90 days.
Registration of a receipt, receipt, bank card, you need to do on the one who will deal with the refund.
How to refund VAT in the UAE for purchases at the airport and other points of entry/exit?
It is enough to go to the counter where the tax free is issued before the start of check-in and pre-flight inspection. You need to take with you a receipt for the purchase, a receipt, a passport, as well as a credit card and a ticket. Sometimes the goods are asked to show.
To make a refund, you need to get an international credit card, for example, Visa, Mastercard, etc. Also, as mentioned earlier, it can be issued in cash, but with a limit of 7000 AED per day. The process is not limited for the card.
There is also the possibility of self-registration through the Planet Payment terminal. To do this, you will need to scan your passport, invoices and enter card details in it. In this case, a credit card is required, even if you want to receive money in cash. It is a guarantee.
How to refund tax in Dubai to the airport?
Using the terminal, you can return the funds in advance, because they are in the Mall, large shopping centers, hotels. The procedure is identical everywhere.
How to track the VAT refund process?
The tax free receipt attached to the receipt contains a QR code. It allows you to follow the progress of the purchase along the “path” of return. Just click on the link in the code to view the current status.
The new “paperless” VAT refund system in Dubai and the principle of its use
When buying a product, inform the seller about the planned return. He, in turn, will issue an electronic check according to your passport, that is, he will enter you into the database. Next, you will need to scan your passport in the Planet terminal, and the system will already be aware of the purchases and calculate the refund amount on its own. At the end, enter your bank card details to receive funds.