The UAE has unveiled a new initiative allowing tourists to claim value-added tax (VAT) refunds on e-commerce purchases made during their stay. This move is part of the country’s strategy to strengthen its position as a leading hub for tourism and e-commerce, according to the Ministry of Finance’s Federal Tax Authority (FTA).
Seamless Refund Process for E-Commerce Orders
The FTA, in collaboration with Planet—the authorized VAT refund system operator—has introduced a streamlined process for tourists to claim VAT refunds on online purchases. Tourists can now request VAT refunds through participating e-commerce platforms by providing their travel document details at checkout, before the order is shipped.
The refund registration is finalized after verifying the tourist’s identity during delivery or the online order fulfillment process. Khalid Al Bustani, Director General of the FTA, emphasized the initiative’s alignment with the UAE’s digital transformation goals and its commitment to enhancing the tourism experience.
“The VAT refund procedures are processed smoothly, quickly, and efficiently, from the moment of purchase until the refund is completed when the tourist departs the country,” Mr. Al Bustani stated.
Supporting Tax Compliance and Economic Diversification
The new system also upholds strict compliance with tax legislation. Since introducing a 5% VAT on most goods and services in January 2018, the UAE has used taxation to diversify its economy and reduce reliance on oil revenue.
The VAT refund scheme for tourists has been available since November 2018, allowing visitors to claim refunds on purchases worth at least AED 250 ($68) before departing the country. Fully automated self-service kiosks were launched in 2019, simplifying the refund process. A paperless tax refund system was later introduced in 2022, eliminating the need for physical receipts.
Evolving Tax Landscape in the UAE
This latest VAT initiative comes amid broader tax reforms in the UAE aimed at diversifying revenue streams and boosting economic competitiveness.
- In 2023, a federal corporate tax of 9% was introduced for financial years starting on or after June 1.
- Starting January 1, 2025, large multinational enterprises will be subject to a 15% domestic minimum top-up tax on profits, up from the current 9%.
- From 2026, refundable tax credits of up to 50% will be available for research and development activities, while incentives for high-value employment roles will begin in 2024.
Boosting Economic Competitiveness
The UAE generated AED 272.6 billion in tax revenue during the first three quarters of this year, underscoring the success of its evolving tax framework. The new VAT refund system is expected to further enhance the UAE’s appeal as a global destination for tourists and a hub for e-commerce innovation.
This initiative solidifies the UAE’s commitment to fostering innovation, simplifying processes, and creating a future-ready economy.