Dubai VAT Refund: Everything You Need to Know – Step by Step Guidelines 2024

Since introducing Value Added Tax (VAT) in the UAE on January 1, 2018, Dubai has implemented a robust VAT refund system for various categories of individuals, including tourists, businesses, and UAE residents. This guide will cover the process of claiming a VAT refund, eligibility criteria, and step-by-step instructions to ensure a smooth and hassle-free experience.

What is VAT?

Value Added Tax (VAT) is an indirect tax applied at each stage of production and distribution of goods and services. In the UAE, VAT is currently set at 5%, which is relatively low compared to global standards. Businesses in Dubai charge VAT on taxable goods and services and are required to remit the collected VAT to the Federal Tax Authority (FTA). However, in certain cases, VAT can be refunded, particularly for tourists, foreign businesses, and local UAE citizens making specific transactions.

Who Can Claim a VAT Refund in Dubai?

There are three primary categories of individuals eligible for VAT refunds in Dubai:

1. Tourists: Visitors to Dubai who are not residents of the UAE can claim a refund on the VAT they paid for goods purchased in the country.
2. Businesses: Companies that are VAT-registered in Dubai may be entitled to recover VAT on purchases made for their business activities.
3. UAE Nationals: Emirati citizens building new residences can claim a VAT refund on specific construction-related expenses.

Each category has its own set of rules, eligibility criteria, and processes for claiming a VAT refund, which we’ll explore in detail below.

VAT Refund for Tourists in Dubai

The UAE’s tourist VAT refund system is designed to allow visitors to claim back the VAT paid on eligible goods purchased during their stay. Here’s a detailed look at how tourists can benefit from this system.

Eligibility Criteria for Tourist VAT Refund

To qualify for a VAT refund, tourists must meet the following conditions:

• The individual must not be a resident of the UAE or any other GCC VAT-implementing state.
• The goods purchased must be exported from the UAE within 90 days from the date of purchase.
• The tourist must leave the UAE via a registered exit point (e.g., airports, seaports, or borders).
• VAT refunds are available only for goods, not services.
• The goods must have been purchased from retailers participating in the VAT refund scheme.

How to Claim a VAT Refund for Tourists

Tourists can claim their VAT refund at airports, seaports, or border crossing points in Dubai. The process is automated and facilitated through an electronic system integrated with the Federal Tax Authority (FTA) and retail outlets. Follow these steps to get a VAT refund:

1. Shop at Registered Outlets: Ensure that you are shopping at stores that are part of the Tourist Refund Scheme. These retailers will display signage indicating their participation.
2. Request a Tax Invoice: At the time of purchase, request a tax invoice from the retailer. This invoice should include the details of the purchase, the VAT charged, and the retailer’s VAT registration number.
3. Submit Your Claim at the Airport: When leaving Dubai, present your tax invoices at a designated VAT refund kiosk located at airports, seaports, or border exits. You will also need to show the purchased goods, your passport, and your boarding pass.
4. Receive Your Refund: If approved, you can receive your refund in cash (up to a limit) or as a credit to your bank card. Note that a small processing fee will be deducted from the refund amount.

Important Notes for Tourists

Refunds can be claimed for goods purchased in the UAE only, and the goods must be exported out of the country.

The VAT refund system is managed by Planet, an international payment service provider, in collaboration with the UAE government.

VAT Refund for Businesses in Dubai

Businesses operating in Dubai that are registered for VAT can claim VAT refunds on purchases related to their business operations. Here’s how the system works for businesses.

Eligibility Criteria for Business VAT Refunds

To be eligible for a VAT refund, businesses must meet the following conditions:

• The business must be VAT-registered with the Federal Tax Authority.
• VAT refunds can be claimed for goods and services purchased in Dubai that are directly related to the business’s taxable activities.
• The business must maintain proper VAT records, including tax invoices, for all purchases and sales.

How to Claim VAT Refund for Businesses

1. File VAT Returns: VAT-registered businesses must file their VAT returns periodically (monthly or quarterly) with the FTA. The VAT return should include details of VAT collected on sales (output VAT) and VAT paid on purchases (input VAT).
2. Calculate Input VAT: The business calculates the VAT paid on purchases (input VAT) and deducts it from the VAT collected on sales (output VAT). If the input VAT exceeds the output VAT, the business is entitled to a refund.
3. Submit a Refund Request: If the business is eligible for a refund, it can submit a VAT refund request via the FTA’s e-Services portal. The request will be reviewed by the FTA, and if approved, the refund will be credited to the business’s registered bank account.

Key Considerations for Businesses

Businesses must ensure that all tax invoices are compliant with VAT regulations and are properly documented.

Businesses must be registered for VAT in the UAE to claim refunds. Non-registered businesses are not eligible for VAT refunds.

VAT Refund for UAE Nationals

UAE citizens building or renovating new residential properties can claim a VAT refund on certain construction expenses, including materials and services. This refund aims to ease the financial burden on UAE nationals when constructing their homes.

Eligibility Criteria for UAE Nationals’ VAT Refund

The claimant must be a UAE national.

1. The VAT refund is applicable only to the construction of new residential buildings intended for personal use, not for investment or commercial purposes.
2. The claimant must provide proof of ownership of the property.
3. The VAT refund applies to specific building materials and services directly related to the construction or renovation of the home.

How to Claim a VAT Refund for UAE Nationals

1. Collect Tax Invoices: During the construction or renovation process, keep all tax invoices for building materials and services that are eligible for VAT refunds.
2. Submit a Refund Request: The UAE national must submit a refund request via the FTA’s e-Services portal. Supporting documents such as building permits, proof of ownership, and tax invoices must be included.
3. Receive the Refund: Once approved, the VAT refund will be credited to the claimant’s bank account.

Important Notes for UAE Nationals

The VAT refund covers construction materials such as concrete, bricks, electrical wiring, and plumbing systems.

The refund does not cover furniture, appliances, or decorative items.

FAQs on Dubai VAT Refunds

1. Can I claim VAT refunds on services in Dubai?

No, VAT refunds are only available on goods. Services are not eligible for VAT refunds for tourists or UAE nationals.

2. What is the minimum purchase amount to claim a VAT refund in Dubai?

The minimum purchase amount for a tourist VAT refund is AED 250 per tax invoice.

3. How long does it take to receive a VAT refund?

For tourists, VAT refunds are processed immediately at the airport or border exit points. For businesses and UAE nationals, the refund process may take several weeks depending on the complexity of the claim.

The VAT refund system in Dubai is designed to provide relief for various categories of individuals, including tourists, businesses, and UAE nationals. By following the correct procedures, you can ensure a smooth and efficient VAT refund process. Whether you’re visiting Dubai for leisure, conducting business, or building a new home, understanding the VAT refund process can help you save costs and simplify your financial transactions.