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The Tax Refund for Tourists scheme which is in effect in the UAE since 2018 seems to benefit both the businesses and tourists. Currently, tourists are able to request refunds on the Value Added Tax (VAT) incurred on their purchases made during their stay in the UAE.

FirstBIT ERP provides the documents and processes that can be used to account for VAT amounts refunded to tourists.

Participating merchants and the Planet system

To be eligible to participate in VAT refunds for tourists, your company must be registered in the Federal Tax Agency for the Tax Refund for Tourists Scheme and meet certain other requirements, such as be a VAT payer and a financially stable company.

The exclusive operator of the Tax Refund for Tourists Scheme in the UAE is Planet which also operates in more than 50 countries around the world.
Tourist transactions are tracked through a fully integrated electronic system maintained by Planet which connects registered merchants, service operator (Planet), and all the UAE airports and ports. Sales to tourists

When buying eligible goods from your company, a tourist can request a Tax Free purchase and confirm his or her status by presenting a valid passport.

Note. The VAT cannot be refunded for motor vehicles, boats, and aircrafts.

At this point, your company charges the full amount including the VAT and provides the tourist with a standard sales receipt or tax invoice.

However, you need to enter the tourist information into the Planet system. In turn, the Planet system prints a Tax Free tag with QR-code that must be placed on the back side of the tourist's sales receipt (Tax Invoice).

Refunds to tourists and restrictions

A tourist can claim VAT refund no later than 90 days from the date of purchase. Currently, the minimum of tax-free purchase that is eligible for VAT refund is 250 Dirhams.

At a Planet service point in an airport or port, a tourist presents the purchased goods, sales receipts with tags and QR-codes, ticket, and passport. There is a charge of 4.50 Dirhams for each claim.

For the following goods the paid VAT cannot be refunded:

  • Goods that have been consumed, fully or partly, in the UAE or any Emirate.
  • Motor vehicles, boats, and aircrafts.
  • Goods that are not accompanied by the tourist at the time of leaving the UAE.

Once the goods are inspected and information is validated, the tourist can choose a refund payment method:

  • Cash: There is the maximum refund amount (currently, 10,000 Dirham) that is allowed to be refunded in cash in a 24-hour period. The remaining amount will be paid to a card.
  • Bank card: There is no limit to the refunded amount.

Planet charges 15% of the refund amount as commission when processing the refund.

Reimbursing the operator

Each month, Planet informs your company about VAT refunds issued to tourists on their purchases made in your company. Your company must reimburse Planet and pay the requested amount on the terms set with Planet.

However, your company may deduct this amount from the output tax for the tax period in which the refunds were actually paid by Planet to tourists.

Implementation in FirstBIT ERP

You create a supplier master record for the service provider, Planet, using the Sales > Master Data > Companies form. For details, refer to Adding a Company.

Onсe the Planet's report on VAT refunded to tourists is received, you create a Tourist VAT Refund Report with the information received from Planet using the following form: Taxes > Tax Documents > Tourist VAT Refund Reports. For details, refer to Creating a Tourist VAT Refund Report.

Then, to adjust the amount of sold supplies, you need to create an Output VAT Transaction with the Tourist Tax Refund transaction type which will adjust the amount of supplies by substracting the refunded VAT amount. As the result of this transaction, the amount of taxable supplies sold to tourists will be decreased by the VAT amount actually refunded to tourists. For more information, see Creating an Output VAT Transaction.

The adjusted amount of sales and the VAT refund amount (as reported by Planet) will automatically appear in the VAT Return for the tax reporting period as negative values in the VAT on Sales and All Other Inputs section, box 2.

To reimburse Planet, you can create a bank payment or a cheque payment manually with the To Supplier transaction type and without specifying any basis. For details, refer to Creating a Bank Payment.





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