Yes, VAT will be charged to tourist if any goods are purchased or services are availed by tourists during the period of stay in UAE. As per Executive Regulation, tourists may apply for a tax refund under Tourists scheme
- Goods that are purchased on which VAT is charged are supplied to the tourist who is in the state during the purchase of goods from the supplier
- Tourists intend to leave the state within 90 days from the date of supply and
- The goods are exported by the tourists within 3 months from the date of supply.
The refund scheme is available only for the purchase of goods and not for services. The Authority may publish a list of Goods that shall not be subject to Tax Refunds for Tourists Scheme. VAT on a hotel stay charged to tourists cannot be claimed as refund under the scheme.
The objective of giving this relief is not to tax goods that will be used outside the state. Since the services will be availed within the state, the scheme does not give benefit for services.
A person is treated as a tourist who is not a resident of any of the implementing states and who is not crew member on the flight or aircraft which is leaving implementing state. Only natural persons fall under the category of tourists.
Foreign companies not having a place of business in states cannot be considered as tourists on the argument that such companies are not resident of any of the implementing states.
The cabinet is yet to issue a decision introducing:
- The date on which the Tourists Scheme comes into effect.
- The mechanism for tax refunds.
- Limitations on claiming tax refunds.
- Processes for any verifications to be undertaken under the Scheme.
- Any other conditions or procedures that the Cabinet considers necessary for the operation of the Scheme.
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