The UAE looks set to introduce value-added tax (VAT) from January next with five per cent standard rate, but Dubai Duty Free expects new consumption tax will not be charged on products sold at Dubai airports, its senior official says.
“It is the view of Dubai Duty Free that VAT and excise tax will not be applicable on products sold airside at Dubai’s Airports as they are being sold to passengers leaving the Emirate of Dubai,” Bernard Creed, senior vice-president – finance, Dubai Duty Free, told a leading daily.
Dubai Duty Free is considered one of the world’s biggest travel retail operators with presence at Dubai International and Al Maktoum International. The airport retail operator, which employs more than 5,000 workers today, registered 27.1 million transactions to post record Dh6.6 billion ($1.85 billion) sales last year compared to Dh73.4 million ($20 million) in 1983 when it launched its operations.
The officials at the duty free are confident of getting the clarity on VAT in coming days and said retail sales at Dubai airports will not be suffered due to introduction of new consumption tax. They were of the view that Dubai Duty Free sales may cross $2 billion sales mark this year ahead of the new levy.
“Discussions are underway both within the airport and with external consultants for a clear statement of exemption for goods and services sold in Dubai Airport. Until there is greater clarity on the above issues, it is not possible to reach any meaningful conclusion on impact of taxes on our business,” Creed said.
On January 1, 2018, the UAE will join the club of nearly 150 nations by implementing a five per cent VAT in the country to diversify revenue sources. VAT is expected to generate up to Dh12 billion revenue in its first year of introduction, and may generate between Dh18 billion and Dh20 billion in 2019.
The Ministry of Finance has already launched a programme to host VAT awareness workshops for businesses across the country. However, there is still no clarity on VAT application on different goods and services as well as its refund to visitors and tourists at the airport.