The federal authorities have come up with VAT-free products UAE taxes rules. Earlier in 2018, introduced a VAT tax of 5% in January, and later the same year, the VAT-free products UAE taxes rules were redefined. Now, they were made 0% for online shopping. This brings the revolution in the online shopping portals in UAE due to new ways to lure customers and increase sales.
The full form of VAT is a value-added tax, and it is a form of indirect tax on the purchase of online goods and services. The amount of tax depends on the value of your order, and it was 5% charged in the UAE. This tax was being charged from the customers when they used to purchase online goods or services in the UAE.
The reason to apply the VAT in the UAE was to keep the supply chain maintained. Right from production to final sale, the VAT taxes are introduced to maintain the process flow. If you travel to the UAE and purchase the goods there, the VAT is mandatory to pay. But, now, for non-residents, the VAT tax is not necessary now. The people who prefer to shop products online from UAE need not pay VAT tax and can enjoy VAT free best online shopping in UAE. There are many other countries (160 around) that are having VAT mandatory in their countries.
What Is VAT Refund?
VAT refund or VAT reimbursement is the process to get the money back that you paid for VAT while purchasing online goods in UAE. The online shops in UAE ask the user to pay the VAT tax during online shopping from best sites. Actually, whenever you go to the online website and try to make the purchase, the VAT is already applied to your order amount.
Let's say you paid 5% VAT tax while purchasing the product and the total order amount was the product's amount and VAT amount of the product. So, when you leave the UAE, the VAT money will be paid back. It has made online UAE shopping tax-free. Since the VAT is mandatory for UAE residents, you are bound to pay the VAT as per the government rules and regulations.
The VAT is calculated products wise or order-wise for online shopping from the best stores. Like for some products, other taxes may be involved along with VAT, and hence total tax amount will be increased. In other cases, the VAT tax will be the only tax. So, while refunding, only the VAT tax amount will be returned, and the rest of all other taxes will be applicable. Hence, there can be a variation per-product tax calculation and entire VAT amount tax calculation.
What is Tax-Free Shopping?
The customers are often worried about the extra amount of tax involved with the online product purchase. The online shopping sites in UAE can allow the customers to shop products online without any tax money in addition. The tax-free online shopping UAE allows the users to purchase the goods online, and when they are exported, the shoppers are allowed to get a refund on the VAT amount. The only condition is that the online shoppers must not be the resident of UAE and should comply with all the rules and regulations while making a purchase in order to get vat free items.
So, technically, the customers have to pay VAT money with online shopping UAE, but later the refund will be initiated for the VAT amount, and this makes the online shopping tax-free.
Conditions & Eligibility Of VAT
The overseas resident who has come temporarily to the UAE for any purpose is eligible to receive the VAT for online shopping and purchases. The tourists remain very attracted to UAE, and in order to make online shopping simpler, the nation has made the VAT taxes free. But, the UAE resident is not allowed to avail of the free VAT benefit and won't be allowed to grab the refund. The person must not be any worker or resident of any state. He must not be a crew member of a UAE flight that leaves for any other country.
There are certain conditions to avail the tax credits for overseas tourists and travelers who come to UAE. Let's explore all such details to understand the VAT rules and policies:
The online products purchased from that online retailer that complied with the tax rules and regimes. The tax refund scheme must be explained in terms and conditions on the online website or portal. You must check the tax-related details on the online shop in UAE before making the purchase in order to ensure the VAT tax refund.
Once you have purchased the online products in UAE and are planning to leave soon, the limit is 90 days to receive the VAT refund. As per government rules and regulations, if you leave UAE after 90 days of the online product purchase, the refund won't be valid.
The tourist must have a valid passport license and should be 18 years old. Without these two conditions, the refund will be denied.
The online shop must put a tag of “Free Vat” on the sales receipt, and you need to check the same after purchase. If the tag is not available, you must try to check the VAT terms and conditions of the online store.
The tourist must validate the payment and purchase of the online shopping at the time of leaving the country. (i.e., at Airports). The taxable goods must be checked and validated in order to get a refund for the VAT.
If you leave the nation without the purchased goods and services, the VAT refund won't be guaranteed. You must make sure to carry the purchased goods with you once you have decided to leave the UAE.
The retail stores also started showing the Free VAT products on the offline stores in UAE. You can also purchase products from them and request a VAT refund.
We hope that the above-shared information proves helpful to you.