VAT in GCC
Sector Impact > Tourism
Tourism is a very important sector for economies diversifying from Oil & Gas revenue in the region and may have to revise pricing strategies to reflect the impact of VAT.
Tourism services such as ticketing, hotel reservations, tours will require to charge VAT depending on where the services are being rendered.
Tourism services sold to inbound tourists may attract VAT, however, services for outbound tourism may be under the zero tax category. For example, overseas Hotel Rates may not attract VAT but a service component may be charged separately and attract VAT (detailed regulations awaited)
Tourists who purchase goods such as electronics, consumer appliances, textiles and other goods will be charged VAT, however it is not yet clear whether they will be able to claim a VAT refund as available in other countries. As per the VAT FAQs released by MOF-UAE.
Tourist VAT Refund Scheme
The Dubai Tourism sector is going to benefit greatly from the FTA’s announcement outlining the rules and regulation for VAT Refund to Tourist puchases.
The UAE’s Federal Tax Authority (FTA) has announced that from November 2018, eligible tourists will be able to receive a proportion of the VAT as a refund when they shop at registered stores.
The UAE’s Federal Tax Authority has appointed Planet as its exclusive tax refund operator for the Tourist Refund Scheme
Planet is an international company, but for the UAE operations and executing the Tourist Refund Scheme in the UAE, a Special Purpose Vehicle (SPV) has been set up, and the project will be executed by Planet along with local partners.
The FTA had said that outlets and points of sales across the country will be connected for the tourist refund scheme.
Tourist refunds will only be possible if they purchase goods from retailers registered with FTA. Designated spaces will be provided where tourists can easily reclaim taxes through an electronic system, without any human involvement. The digital system determines the taxes that are eligible for a refund and then reimburses tourists.
Click here to read more about the VAT Refund to Tourist purchases.
Sector VAT News Update
Sector impact analysis is provisional based on the GCC Draft and may change when the country issues the relevant VAT laws.