The UAE’s Federal Tax Authority (FTA) has recently revealed a surge in tax refund transactions for tourists, underscoring the nation’s growing tourism sector. With an unprecedented 14.41 percent uptick in 2023, totaling 4.18 million transactions, the FTA’s electronic tax refund system aligns with the UAE’s digital strategy for the smart transformation of services across all sectors, including the tourism sector.
Exponential growth
The UAE’s electronic system for refunding value-added tax (VAT) to tourists has significantly grown in the last few years. FTA data revealed that the system recorded around 14 million electronic transactions for tax refunds to tourists since its launch in November 2018 until the end of 2023.
The daily average of electronic transactions for tax refunds to tourists in the UAE has steadily increased over the past four years. It increased from 4,130 transactions daily in 2020 to about 7,390 transactions in 2021. In 2022, the number of transactions rose to about 10,020 transactions daily. This number continued to rise to about 11,460 transactions in 2023.
Tourism recovery boosts growth
Khalid Ali Al Bustani, director-general of FTA, stated that the tourism recovery the UAE has witnessed and the continuous development operations for the electronic system the authority has carried out supported that growth.
The total annual number of electronic transactions for tax refunds to tourists in the UAE increased from 1.51 million transactions in 2020 to 2.7 million transactions in 2021, a 78.54 percent increase. In 2022, the authority recorded a 35.44 percent increase in transactions to 3.66 million. Moreover, transactions rose to 4.18 million transactions in 2023, with an increase of 14.41 percent.
Digital retail integration
Integral to the system’s success is the seamless integration of retail systems with the digital tax refund platform. Al Bustani emphasized the pivotal role of this integration, which has seen a substantial expansion to over 16,480 stores by the end of 2023. This has fostered a more streamlined and efficient process for tourists.
He highlighted that the expansion of the digital tourist tax refund system in the UAE aligns with the government’s digital strategy for the smart transformation of services. Hence, the system prioritizes user experience, accessibility and swift refund procedures.
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Automation and accessibility
Al Bustani emphasized the FTA’s commitment to deploying a large number of self-service devices. This will allow tourists to process tax refunds upon their departure from the UAE in about two minutes. He also noted that the current number of self-service tax refund devices is 85. That is a 19.72 percent increase compared to 71 devices at the end of 2020. These devices are available in multiple major commercial centers and hotels. Moreover, they are available at tourist departure points from the country.
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