UAE becomes first country to adopt fully digitalised VAT refund system

The world’s first fully digital VAT refund system is being launched in the United Arab Emirates (UAE), with visitors able to claim sales tax back on purchases made in the country from the 18th November. The system, managed by international payments provider Planet, is an industry first and is set to transform the way that tourists shop abroad. Planet will manage the entire process for tourist VAT refunds on behalf of the UAE Federal Tax Authority (FTA), after the UAE introduced 5% VAT in January 2018.

The system involves quick and simple digital procedures through which VAT is refunded directly to tourists upon the presentation of invoices for purchases made in the UAE. The first phase of the roll out will see the service, with on-hand customer support, implemented at Abu Dhabi, Dubai and Sharjah International Airports. As of mid-December, the system will be fully operational, including all airports and land and sea ports in the UAE.

This move is part of an ongoing effort by the UAE government to boost its non-oil economy, with tourism and retail services identified as growth sectors. The UAE has experienced an unprecedented rise in arrivals in recent years, with one of country’s emirates, Dubai, welcoming 15.9 million overnight visitors last year – making it the fourth most visited city globally[1]. The digital Tax Free shopping offering is expected to significantly boost the country’s appeal to international shoppers.

The global Tax Free market is estimated to be worth in excess of $60 billion per year, and therefore presents major opportunities for the UAE as it seeks to cement its position as one of the world’s leading retail and travel destinations.

The region is renowned for its gold and diamond market, attracting shoppers with a penchant for these luxury items. The new VAT refund system will make its offering even more competitive.

“The new Tax Free system being implemented in the UAE is an ambitious move not only for the country, but for the wider Tax Free industry. The end-to-end digital service is the first of its kind, and represents the future of Tax Free shopping. It is our ambition to bring this premium service to countries across the world as the tourism and retail industries – and consumers – become increasingly sophisticated. This tech-driven innovation demonstrates Planet’s leadership in this category,” said Gary Byrne, Director of Worldwide Partnerships & New Markets at Planet.

The new system has already proven popular with retailers, with Planet witnessing a high demand in registration:

“It has been incredible to see this initial uptake from businesses in the UAE. Not only is this an indication of the sector’s competiveness, but also their understanding of the need to attract and engage with global audiences. We have been really impressed with eagerness to embrace tourists and capture their share of international spend,” commented Eyad Al Kourdi, General Manager, Planet Tax Free UAE. “The roll-out comes at a great time, with the UAE’s shopping sector expected to receive an uptick over the coming months, with events such as the Abu Dhabi Grand Prix and winter festivities driving tourism,” he added.