UAE sets maximum daily cash limit for tourist VAT refund

Tourists will now receive a maximum of Dhs7,000 per day in cash refunds for value added tax (VAT) when leaving the UAE, the Federal Tax Authority (FTA) has announced.

Previously, the maximum cash amount that could be returned to a tourist for a 24-hour period was Dhs10,000.

The new decision has been taken by the FTA to “reduce the reliance on cash”, a statement said.

The UAE, which implemented a 5 per cent VAT on goods and services in January 2018, introduced the refunds scheme for tourists in November 2018.

Tourists can submit their tax invoices on purchases they made at retail outlets registered within the scheme, along with their passport and credit card.

While the cash refund limit has now been capped, no maximum amount has been set for transferring refundable tax to a tourist’s credit card account.

Read: Tourists will be charged a fee for VAT refund, clarifies UAE’s FTA

FTA director general Khalid Ali Al Bustani said: “The new decision regarding the maximum daily amount a tourist can reclaim in cash is in line with the UAE’s overall strategy to reduce reliance on cash in financial transactions, and benefit from the country’s advanced digital and technological infrastructure.

“These systems are key components in driving the continuous development of the UAE’s financial and economic sectors; they facilitate the flow of money and financial assets securely, increasing trust in financial transactions – both local and international.”

The move is part of measures to support the UAE’s smart government initiative, which emphasises the e-payment sector.

The FTA has also installed several self-service kiosks where tourists can reclaim the VAT they incurred on purchases in the UAE at any of the exit ports covered by the scheme.

Al Bustani said the electronic service makes it easier and faster to process refunds for tourists on taxes they incurred during their stay in the UAE.

Tourists can check whether they are eligible for a refund, verify that the purchased items are with them when applying for the refund, and then recover the taxes through an automated process without interacting with employees.

“The authority has authorised international system operator Planet to run the scheme’s electronic system, offering users fully automated procedures to process their applications. Planet employees are also stationed near all self-service kiosks to assist tourists when needed,” he said.

“The new decision abides by best practices implemented in advanced economies, which prioritise effective and holistic risk management and promote e-payment solutions,” he added.

Also read: Here’s how the UAE’s VAT refund system for tourists will work