The UAE is the first country in the world to allow tourists to claim Value Added Tax (VAT) refunds on their online shopping transactions. The initiative, launched last year by the Federal Tax Authority (FTA), is a significant step in the country's efforts to enhance its digital services and provide a seamless experience for visitors.

Previously, tourists could only claim VAT refunds on goods purchased in-store at registered retail outlets. The new service extends this benefit to online purchases , providing greater convenience and encouraging tourists to shop from a wider range of retailers in the UAE.

Khalid Ali Al Bustani, Director-General of the Federal Tax Authority, stated that the service has been available for approximately eight months.“We are a country that attracts many tourists who shop through online platforms. In most countries, this is considered a risky process, with the potential for tax evasion if the person is not a resident. We have developed the service with online platforms to verify the buyer before they enter their details for the refund," he added.

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Al Bustani explained that the FTA has an integrated electronic system that tracks tourist purchases from their entry into the country until their departure.

The authority is currently collaborating with three e-commerce platforms and is open to expanding the service, provided that the platforms adhere to the verification rules.

The initiative is part of the UAE's broader strategy to eliminate bureaucracy and embrace digital transformation.

The FTA's 'Digital Services with Zero Bureaucracy' strategic retreat brought together government and private-sector officials to discuss initiatives aimed at enhancing digital services within the UAE's taxation sector.

These efforts have already yielded significant results in the first stage, with the UAE ranking first globally in the Tax Index, low bureaucracy, and ease of paying taxes. The improvements have led to a 53 per cent reduction in required documents, a 55 per cent reduction in data fields, and a 77 per cent reduction in service completion time.

“Our future plans focus on continuing this journey to build on what has been achieved,” said Al Bustani.“These achievements are a catalyst for us to add new initiatives to facilitate and expedite the completion of services and achieve an impact in short periods.”

UAE's Zero Bureaucracy Initiative

The strategic retreat also discussed the Authority's initiatives for the second stage of eliminating bureaucracy and enhancing digital services.

The retreat follows a successful first stage that achieved remarkable results in line with the vision of Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.

During the first phase, the authority conducted 24 interactive workshops with more than 560 participants, generating over 589 development proposals.

This collaborative effort resulted in more than 100 zero bureaucracy processes being approved for digital services, with 64 processes completed and the remainder under implementation.

The FTA's outstanding performance in the first stage was recognized when it won the inaugural Government Zero Bureaucracy Award in the Business Sector Impact category.

The second stage, now being planned through this strategic retreat, aims to build upon these achievements with a focus on effective adoption of artificial intelligence and continued efforts to eliminate digital bureaucracy.

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