95% of UAE retailers to adopt paperless tax-refund for tourists

The UAE’s Federal Tax Authority has announced the launch of a new paperless VAT refund initiative for tourists shopping in the country. In partnership with Planet, the exclusive operator of the tax refund system for tourists, the redefined tax refund solution is ready to be adopted by retailers across the country.

Seddiqi Holding, Apparel Group, Mohammed Rasool Khoory and Sons, and Dubai Gold and Jewellery Group are among the first to implement the process to offer paperless tax refund to its tourist customers.

Since 2018, tourists could claim refund on the VAT paid on purchases made in the UAE at all ports of entry and exit. However, this system wasn’t exactly hassle-free. “The biggest challenge was that tourists needed to carry a lot of paper, as, in order to redeem the VAT refund, they needed to carry a printed invoice with a sticker that shows the reference number for the refund code. At the airport, this paper would be checked, during a lengthy process,” explained Khalid Ali Al-Bustani, Director-General of UAE FTA.

“We decided that the data must be ready before the tourists arrive, as a measure of pre-emptiveness. We worked on a plan along with Planet to introduce a scheme where merchants (retailers) can automatically link their systems to the tourist refund and the invoices would be generated electronically. We are the first in the world to achieve that,” he added.

The process increases efficiency for both retailers and shoppers, enhances customers’ journeys, and is also more environment-friendly.

“ESG is a buzzword in the corporate world today. This initiative by FTA and Planet is a welcome initiative in truly working towards achieving these ESG goals. UAE is the first to introduce this kind of a technology in this field, staying true to its agenda of incorporating innovation and advanced technologies to benefit the people and world,” said Abdul Salam KP, Dubai Gold and Jewellery Group.

The FTA plans on on-boarding 95% of the retailers in the UAE to implement this paperless tax refund solution within one year. The companies that implement the process will now be issuing e-receipts, which will enable tourists to seamlessly claim their VAT refunds at the airport.

“Apparel is always looking for answers to – ‘how can we deliver better, how can we remove customers’ pain points, and how can we make the customer’s journey seamless?’ I am very excited to be amongst the first to join this initiative and am looking forward to see what’s next,” said Neeraj Tekchandani, Group CEO at Apparel Group.

The process is also in place to be availed by tourists shopping online, but only under the click-and-collect option.

“Two mandates for customers to be able to avail tax-free shopping is that they have to be a tourist and they must be in the country. But when retailers receive an order in the UAE from outside the country, they will be ineligible to avail this. So the process exists for e-commerce but some retailers might choose to integrate it and some might not,” explained Eyad Al Kourdi, General Manager at Planet.