Many people love shopping in the UAE, both for the huge choice of premium and luxury goods and for the rather affordable prices. Since 2018, VAT has also been introduced in the UAE, but what not everyone knows is that tourists can request a refund.
In this guide I will explain how to apply for a VAT Refund in Dubai (the same rules also apply in other UAE airports) and give you a brief overview of Dubai tourist taxes.
What you need to know about Dubai VAT
In recent years, with the advent of the economic crisis in the Gulf countries, heavily dependent on the oil economy, the UAE government has introduced the application of VAT, the Value Added Tax.
The rate applied is 5%, so it is still quite low.
VAT is paid by all, residents and tourists, on all goods, including food, without exception. The VAT amount is clearly indicated on the invoice.
How does the Dubai VAT Refund work?
Currently the UAE VAT Refund Scheme is open to tourists and non-residents and is operated by Planet, on behalf of the UAE Federal Tax Authority.
The VAT Refund Scheme allows you to do tax-free purchases in the stores that adhere to the system, which are most of those you can find in Dubai and Abu Dhabi.
In order to get a VAT Refund and enjoy your tax free shopping in Dubai or Abu Dhabi you have to go through two steps:
- Ask the shopkeeper to buy Tax Free (so that he will activate the refund procedure for you)
- Validate your purchase at the airport (or port) before departure and collect your VAT refund
You will pay the full amount to the shopkeeper (including taxes) and upon validation you will be refunded the VAT amount (in reality they will not refund the full amount, but about 85%).
Requirements for the UAE VAT Refund
You can apply for a UAE VAT Refund only for goods that are intended for consumption outside the UAE. You cannot claim a UAE VAT Refund for services or goods you have consumed (even partially) in the UAE, such as restaurants, food, hotels, and medical bills (medical bills in the UAE can be very expensive, I recommend you to read my post about travel insurance).
You must also comply with these conditions:
- Goods must be purchased from a retailer participating in the “Tax Refund for Tourists Scheme”
- Goods are not excluded from the UAE Federal Tax Authority’s UAE VAT Refund Scheme
- You must have the explicit intention to leave the UAE within 90 days and you must bring the purchased goods with you (which will be verified and validated before departure)
- The minimum spend must be AED 250
How to shop tax free in Dubai or Abu Dhabi
Although most of the shops that allow tax-free shopping are located in major cities in the UAE (including Sharjah and Ajman, for example) these rules apply to all UAE.
- When in the store, and spending at least AED 250, ask the shopkeeper for a tax free purchase
- Show your passport and your visa, the shopkeeper will have to scan it and enter it in the UAE VAT Refund system
- The shopkeeper will attach a Tax Free tag behind the sales receipt
- The shopkeeper will show you the digital Tax Free form, which you must validate before departure, within 90 days from the date of purchase.
Before departure, at the entrance to the Dubai and Abu Dhabi airports, the ports (including cruise terminals) and at the road borders, you will find a desk where you can go to validate your Tax Free form.
At Abu Dhabi and Dubai Airports, the UAE VAT Refund counter is located in the entrance halls of each terminal.
You have to go to the counter with your passport and with the purchased goods to be validated. Remember this must be done prior to check-in and going through security!
How to apply for a UAE VAT Refund at Dubai Airport if you are short on time
In Dubai Airports, both Dubai International Airport (DXB) and Al Maktoum International Airport (DWC), there are Planet Payment self-service kiosks, located near the VAT Refund Desk.
If you are in a hurry you can go to one of these automatic kiosks, submit the sales receipt (the one relating to tax free purchases), your passport and your credit card. The kiosk will process the validation and refund automatically.
Your tax refund will be credited to your credit card or you can choose to withdraw it immediately (maximum AED 7000), in which case the machine will issue your refund in dirhams.
Are there any other Tourist Taxes?
As in almost all countries in the world, many products are taxed with excise duties. This is already included in the retail price. Excise duties are mainly found on tobacco and derivatives, on energy drinks, on sweets and obviously on alcohol.
Then there are the tourist taxes, which mainly concern hotels.
In a hotel bill you have to expect:
- VAT 5%
- Municipal tax (about 7%)
- Tourist tax (around AED 10 – 20 per room per night)
- Service tax (about 10%)
These taxes are usually already included in the price when you book on Booking.com, which is a good way to avoid any unpleasant surprises.
In restaurants, service costs and VAT (5%) are usually included in the prices shown in the menu. Tipping is not required in UAE restaurants. If you have eaten particularly well, you can round up your bill or leave about 10% tip.
As for alcohol, keep in mind the complex regulations in force in most emirates, such as Dubai or Abu Dhabi (alcohol is prohibited in Sharjah).
In Dubai, alcohol served in restaurants and bars is subject to VAT (5%) which is usually already included in the price you find on the menu. To buy alcohol in liquor stores, a special license is required. Currently, tourists can obtain a free 30-day permit, which is issued directly in the liquor store.