The United Arab Emirates (UAE) has introduced a groundbreaking initiative that allows tourists to claim VAT refunds on online shopping purchases – a first in the world.
This innovative system, launched by the Federal Tax Authority (FTA) in collaboration with Planet, aims to enhance the shopping experience for visitors, making it easier and more rewarding to shop in the country.
Previously, tourists could reclaim VAT on physical store purchases, but now, for the first time, this opportunity extends to online purchases as well. Tourists can now recover 5% VAT on their online shopping while still in the UAE, making it a seamless and convenient process that can be completed digitally.
VAT refund for online shoppers
The UAE has already been offering a fully digital VAT refund system for physical shopping for over two years, and now the same convenience applies to e-commerce. Tourists no longer need to deal with any paper invoices or complex procedures. Instead, they simply scan their passport, complete their purchases, and instantly share their digital invoices with the FTA through registered e-commerce platforms.
To apply for a VAT refund on online purchases, tourists just need to provide their travel documents and personal details during checkout. Once their identity is verified upon delivery or when the order is fulfilled, the VAT refund process is automatically triggered.
Khalid Ali Al Bustani, Director General of the Federal Tax Authority, expressed pride in this new development: "We are proud of the success of the Federal Tax Authority in launching the world’s first electronic system that enables tourists to recover VAT on their e-commerce purchases during their stay in the UAE."
How to claim your VAT refund
To claim a VAT refund on your online purchases in the UAE, follow these simple steps:
- Shop on Registered Platforms: Choose e-commerce platforms that are registered with the FTA to ensure your purchase is eligible for a VAT refund.
- Provide Your Travel Details: At checkout, enter your travel document details and relevant personal information to verify your eligibility.
- Get Verified During Delivery: When your items are delivered or your order is fulfilled, your identity will be verified, and the VAT refund process will begin.
- Receive Your Refund: After verification, you can claim your VAT refund before leaving the country.
The system is entirely digital, meaning you don’t need to fill out any forms or deal with paperwork. Refunds are processed quickly, giving you a fast and efficient shopping experience.
Impact on e-commerce market
The introduction of VAT refunds for online purchases is expected to have a significant impact on the UAE's e-commerce landscape. Local retailers are anticipating a surge in demand, especially for higher-priced items that were previously subject to the 5% VAT.
An online retailer shared, "The biggest gains will be felt in higher-priced categories. Tourists will be more likely to purchase expensive items online, knowing they can claim VAT refunds."
This move is also part of the UAE's strategy to position itself as a leading global hub for both tourism and e-commerce. By offering such incentives, the UAE is enhancing its digital competitiveness and setting new standards in both sectors.
Eyad Alkourdi, General Manager of Planet, commented, "This exceptional initiative provides a seamless and comfortable shopping experience for international visitors, positioning the UAE as a leader in both tourism and digital innovation."
A seamless shopping experience
Tourists visiting the UAE will now experience a truly paperless and hassle-free VAT refund process, one that has already garnered praise for its simplicity and speed. This fully digital system ensures that all VAT refund procedures are completed quickly and efficiently, giving tourists more time to enjoy their trip.
As more e-commerce platforms join the VAT refund scheme, tourists will find it easier than ever to shop in the UAE without worrying about VAT charges. This development is expected to boost the UAE’s reputation as a shopping and tourism destination, making it even more attractive to international visitors.
Whether you're shopping in-store or online, the UAE’s VAT refund system makes it easier than ever to enjoy your purchases without the added tax burden.