The implementation of a value-added tax (VAT) refund for tourists in the UAE will drive visitor numbers and bolster the retail business, according to government officials and local businesses.
Using the system – which was officially approved by the UAE cabinet on Wednesday – non-resident tourists can get a refund of VAT paid on purchases made at participating retailer through designated refund outlets.
According to the government, it is expected to begin in the fourth quarter of 2018.
In a statement, Saif Saeed Ghobash, the undersecretary of the Department of Culture and Tourism – Abu Dhabi, said that in the case of Abu Dhabi, the refund system will “provide further impetus to our strategy of positioning Abu Dhabi as a visitor-friendly destination.”
“The UAE in general, and Abu Dhabi specifically, will now have this added significant attraction to all types of tourists and business travellers, reinforcing the emirate’s position as a ‘go-to’ destination and further boosting potential visitor numbers,” he added.
“It [the refund system] will also work in concert with the recently announced reduction in tourism and municipality fees, which means that accommodation costs will be reduced across the emirate.”
Sultan Al Mutawa Al Dhaheri, the executive director of the Department of Culture and Tourism – Abu Dhabi’s tourism sector
Sultan Al Mutawa Al Dhaheri, the executive director of the Department of Culture and Tourism – Abu Dhabi’s tourism sector, said that “future visitors will now feel the direct impact of this decision in their travel budgets, meaning they can potentially stay loner, explore further and experience more when are here.”
The move has also been welcomed by hoteliers and other hospitality professionals, such as Rudi Jagesbacher, Hilton’s president for the Middle East, Africa and Turkey.
Rudi Jagesbacher, Hilton’s president for the Middle East, Africa and Turkey
“This is yet another step that will not only continue to drive growth in the tourism and hospitality industry, but also boost the overall economy,” he said.
“With over 123 million passengers travelling through the UAE’s airports last year, the country is a thriving hub for tourists…we strongly support this announcement that will make the UAE an even more attractive destination.”
Additionally, Firoz Merchant, the founder and chairman of Pure Gold Group, said that the announcement “is a reflection of the visionary leadership’s efforts that showcase the UAE as the ultimate luxury retail destination.”
Firoz Merchant, the founder and chairman of Pure Gold Group
“The move will attract more tourists, bolster the retail business and industry thereby driving the growth of the economy,” he added.
Government statistics show that the total contribution of the tourism sector to the UAE’s GDP reached 11.3 percent in 2017, equivalent to AED 154.1 billion ($41.9 billion).