The United Arab Emirates operates an approved, fully functional value-added tax (VAT) refund system for tourists. This system is administered by the UAE Federal Tax Authority (FTA) and is based on the international tax-free model, similar to schemes used in a number of European and Asian countries.
The VAT rate in the UAE is 5%, and tourists who are not tax residents of the country are entitled to a refund of part of the VAT paid, provided the established conditions are met.
General principle of how the system works
The VAT refund system in the UAE is implemented in a digital format and operates through registered retail outlets and a specialized tax refund operator. A tourist makes a purchase at a store connected to the system, after which the purchase data is automatically recorded in the electronic VAT refund system.
Unlike some countries where refunds are processed exclusively at the airport, the UAE applies a combined model. Verification of purchases is conducted upon departure from the country, while the refund may be issued in cash or credited to a bank card.
VAT refund procedure
When making a purchase, the tourist must present a passport or other travel document confirming tourist status. The purchase must be made at a store registered in the VAT refund system and must meet the minimum purchase value threshold установлен by the regulations.
Before leaving the UAE, the tourist completes the purchase validation procedure at dedicated VAT refund counters located at international airports, seaports, and land border crossings. In some cases, the purchased goods may need to be presented for visual inspection.
After confirmation, the tourist receives the VAT refund minus the administrative fee charged by the system operator. As a rule, up to 85% of the VAT amount paid is refunded.
Conditions for VAT refund eligibility
A VAT refund is granted only if all of the following conditions are met:
- the goods were purchased within the UAE during the tourist’s short-term stay in the country;
- the purchases were made at registered retail outlets participating in the VAT refund program;
- the goods are exported outside the UAE within 90 days from the date of purchase;
- the tourist is not a UAE resident and does not hold a valid work or residence visa;
- the goods do not fall under the list of exclusions established by the tax authorities.
It should be noted that VAT refunds do not apply to certain categories of goods and services (for example, specific consumable goods and services), as listed by the Federal Tax Authority.
Practical significance of the system
The functioning VAT refund system significantly increases the UAE's attractiveness as a tourist and shopping destination. The digitalized process, the availability of multiple validation points, and the ability to receive refunds quickly help minimize time costs for tourists and reduce queues at airports.
