The Effect of VAT Refund for Tourists on UAE's Economy

Published July 31st, 2018 - 07:04 GMT
The move to refund VAT, yet again shows UAE’s strategic ability to drive the growth of the country. (Shutterstock)
The move to refund VAT, yet again shows UAE’s strategic ability to drive the growth of the country. (Shutterstock)

United Arab Emirates is the most preferred tourist destination in the Middle East and to continue its positive momentum, tourists visiting the country will be entitled to claim back any Value Added Tax (VAT) payments they are charged.

“The UAE has become a regional magnet for foreign investors and tourists, and the move to refund VAT, yet again shows UAE’s strategic ability to drive the growth of the country,” said Tejas Goenka, Executive Director, Tally Solutions - a leading international accounting and compliance software provider.



Trusted by more than 1.2 million businesses globally, Tally Solutions includes a list of 50,000 satisfied clients across GCC that use its VAT software - Tally.ERP 9 Release 6.4 for effective compliance with VAT regulations. Since the launch of VAT, thousands of businesses in the UAE have been using Tally’s software to comply with VAT regulations.

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It has been observed that as many as 140 countries around the world have VAT, according to financial firm KPMG. Some Asian countries place dedicated VAT refund stations in international airports, where foreigners can present receipts and get a refund for purchased items. Others provide tax refund desks within stores. Countries like Australia, Germany, France, Singapore, Japan offer overseas visitors tax refunds for purchases made beyond a prescribed threshold and subject to other conditions.

The UAE’s Federal Tax Authority (FTA) is also working on an advanced integrated digital system to set up a direct connection with points of sale as well as with all UAE ports of entry, allowing the global operator to coordinate among retailers registered with the FTA and enable tourists to submit refund requests for their purchases.

“Internationally, most countries that implement VAT have an online robust system connecting multiple refund agencies and retailers on a single platform, offering tourists a seamless and hassle-free experience while verifying, processing and disbursing the tax refunds. We are confident that the new digital system to be implemented by FTA will be at par with international standards, offering tourists and retailers easy access to claim and release refunds. Since the launch of VAT, thousands of small companies in the UAE have switched to digital platforms from manual systems, demonstrating the country’s global competitiveness,” added Tejas.

While the UAE’s decision to refund value-added tax (VAT) will boost tourism, it will serve as a buoyant force for the meetings, incentives, conferences and exhibitions (Mice) industry as well according to Tejas.

“The UAE’s leadership has always pioneered initiatives that contribute to the growth of the country. As such, the decision to refund VAT will significantly enhance the competitiveness of the MICE industry as well and increase the capacity to attract niche global events, exhibitions and conferences,” continued Tejas.

Tourism contributes heavily to UAE’s economy. In 2017, nearly 16 million people visited Dubai, while a further 123 million passengers travelled through the country’s airports. In total, the tourism sector contributed 11.3 per cent to the UAE’s GDP in 2017, equivalent to Dh154.1 billion. With the latest announcement to refund VAT, UAE’s tourism sector will not only witness a boost, but also allow greater flexibility to the visitors, enhancing their overall experience in the country. 


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