Dubai is the favorite destination for fashionistas and fashion enthusiasts, with its gigantic shopping malls, luxury and designer boutiques, and all its sale festivals such as the Dubai Shopping Festival.
Since the government of the United Arab Emirates introduced the VAT refund system for tourists, it has enabled visitors to save millions of dirhams.
VAT refunds are processed through a fully integrated electronic system that connects merchants registered with the “Tax Refund for Tourists Scheme” to all entry and exit points in the UAE.
But concretely, what is tax-free shopping and how does it work?
Tax-free shopping means recovering the VAT you paid on purchases abroad that you wish to take back with you to your home country. However, please note that VAT refunds are subject to certain conditions.
VAT at 5% was introduced in the Gulf countries in 2018. The Emirates apply a 5% VAT rate to goods, but as a tourist you can enjoy tax-free shopping. Tax-free shopping means enjoying shopping in the UAE and getting a refund of the VAT you paid during your shopping trip.
Basically, it is
the price of the goods – 85% of the VAT amount – AED 4.80 in administrative fees per claim form! That is what we call a winning shopping experience.
But keep in mind that not everything can be refunded; there are conditions, of course. VAT refunds will not apply to anything that has been consumed, either fully or partially, in the Emirates, or to goods purchased in the Emirates that the tourist does not take with them when leaving the country. In other words, the new goods (unused) must be in your possession in their original boxes when you leave the Emirates if you want to claim a VAT refund.
But who can claim a tax refund?
To be eligible for a tax refund, you must:
- be 18 years old or older and not reside in the UAE;
- crew members on flights departing from the UAE are not eligible to apply;
- under certain conditions, GCC nationals are eligible;
- there are restrictions on UAE nationals residing abroad for their studies.
How does it work?
It is very simple. When you shop:
- ask the store for a tax-free purchase – the purchase must be greater than or equal to AED 250,
- please note that the store must be part of the Tax Refund system for you as the buyer to be eligible for a VAT refund;
-
present your passport so it can be scanned on the payment device;
- the seller will then attach a “tax-free” label to the back of your invoice/receipt;
- the digital tax refund form will then be created; remember to validate it before your departure;
- tax-free labels must be validated within 90 days of the purchase date.
How are the goods validated?
Just because you have a tax-free label on the back of your receipt does not mean you will automatically receive a refund. There are rules to follow:
- you must bring the goods and their receipt (with the label on the back) to one of the various tax refund validation points called “Planet Payment” (the official partner of the FTA for tax refunds) at Dubai International Airport DXB or DWC Airport (Al Maktoum); these kiosks are located in all airport terminals.
This step must be completed before checking in for your flight and going through security.
- Note that other tax refund validation points are available at Port Rashid for cruise passengers and at the border between Oman and Hatta;
- There are other Planet Payment kiosks in the city, notably at Dubai Mall, with more locations soon to be available throughout the city.
- At these kiosks, you can submit your invoices, passport, and credit card; the kiosk will take care of the rest and process the refunds automatically. There is no limit on refunds to a bank card, but cash refunds are limited to AED 7000 per day. It is up to you to do the math and choose the most suitable method.
- Also, within the airport, you may be required to go through additional validation checks, and it is quite possible that the goods will be requested for inspection.
For more details about Planet Payment, go HERE:
https://www.planetpayment.ae/ar-en/shoppers/
Now that you have everything you need to reclaim the VAT on your shopping, it is time to spend freely at the best shopping malls in the Emirates.
