What is VAT
VAT is a TAX that is applied to goods and services in Dubai at a standard rate of 5%
VAT Refund for tourist
If you are minimum 18 old years tourist in Dubai and spend AED 250 or more in a single transaction, you are eligible for a VAT Refund.
Refund Fee
Refund fee is charged at AED 4.8 + 13% of the purchase amount as Service Fee
Example
You make a purchase of AED 21,000 and pay a tax of AED 1000
| Purchase Value | AED 21,000 |
| VAT Paid on the purchase | AED 1000 |
| Service Fee | AED 4.8 + 13% = 129.38 |
| Expected TAX Refund | AED 1000 – AED 129.38 =870.62 |
Payment Options
You can either take the money in cash or choose to be credited back in your debit/credit card account.
Catch – The Conversion Fee ?
Here is the catch if you choose the card option. The refund amount will be credited back to your card in your card currency.
If you have a EUR card, you will get refund in EUR.
The card company can charge you 8-9% of the refund amount as conversion fee, so in the example above , you will be charged appx AED 87 as conversion fee, reducing your tax refund to AED 792 which is 79% of the VAT you paid.
Recommendation
Choose to be paid in cash in AED, so that you get the actual amount and get it converted in your home country where exchange shops in malls will probably charge you 2-3% and you can still save 6-7% of the amount that was lost in conversion by the credit card issuer.