UAE shoppers' dismay as UK to axe VAT rebate for tourists

Britain plans to remove the 20 per cent VAT rebate when the country leaves the EU on January 1, 2021

Shoppers walk down Oxford Street in London, Britain, 15 June 2020. EPA

Retail stores have begun to re-open their doors across the UK after three months of lockdown. EPA

People shop in the town centre on June 15, 2020 in Bournemouth, United Kingdom. Getty Images

An employee wearing a protective face mask talks to a customer at the Staples Corner Megastore for Carphone Warehouse and Curry's PC World, as shops re-open following the outbreak of the coronavirus disease, in Brent Cross, London, Britain, June 15, 2020. REUTERS

Retail stores have begun to re-open their doors across the UK after three months of lockdown. EPA

A view of a large sign reminding of two meters social distancing on Oxford Street in London, Britain, 15 June 2020. EPA

People are seen outside a Hermes store, as shops re-open amid the coronavirus disease outbreak, in New Bond Street in London, Britain June 15, 2020. REUTERS

People are seen outside a Chanel store, as shops re-open amid the coronavirus outbreak, in New Bond Street in London, Britain June 15, 2020. REUTERS

The UK’s plan to scrap tax-free shopping for tourists was met with dismay from UAE residents who have long taken advantage of the scheme.

Visitors to the UK from non-EU countries can claim a 20 per cent refund on purchases made there when they leave the country.

But there are plans to remove the VAT rebate when the UK leaves the EU on January 1, 2021.

Tourists from the UAE, who regularly visit the UK to take advantage of the tax-free offers, said they would simply shop elsewhere.

Shamma Ali, 35, an Emirati who works as a senior human resources manager in Abu Dhabi, said she frequently shopped in London.

"London is one of the cities I enjoy visiting. I travelled there every three months and shopped because we used to get back the tax,” she said.

Ms Ali said she would not shop in London if the rebate was scrapped, unless it was for something that could not be bought elsewhere.

"But nowadays we have everything in the UAE,” she said.

“I would also happily shop in other European countries, if necessary.”

Ms Ali would regularly get up to £4,000 ($5,310) back from the VAT rebate.

It is estimated that tourists from the Middle East and China spend up to £22 billion each year during their stay in the UK.

Tourists need to fill out a VAT refund form provided by the retailer. The form is then presented to customs, who inspect the goods before issuing the refund at the point of exit from the UK or the EU.

Salama Mubarak, an Emirati graphic designer, 35, said she travelled to London every winter to stock up on jewellery and handbags.

"It made a huge difference with the tax refund. I would get about Dh6,000 off Chanel earrings,” she said.

She estimated her total shopping refund would add up to about Dh15,000 per trip.

Ms Mubarak, who lives in Abu Dhabi, said she preferred to shop in London because of the quality and choice of bags and jewellery.

“The selection they have in London is very appealing. They have a certain fashion style there that I like,” she said.

“Plus, it is cheaper to buy from Europe with the tax refund.”

But if the tax refund was cancelled, Ms Mubarak said she would no longer be tempted to shop in London.

“Maybe it's a good thing, now I'll start buying less,” she said.

Fatima Mahfouth, 35 an Emirati interior designer, was surprised when she heard of the decision.

“I am shocked at the news,” she said.

"We used to get a very good refund. In Selfridges, they used to pay us the refund cash in the shop and we did not have to wait to go to the airport.”

Ms Mahfouth said she hoped the UK retailers would drop their prices to factor in the tax. But she doubts if that would be the case.

“Hopefully, this will drive us to shop less,” she said.

“We always used the refund to buy other things, so I don't know how this will affect my shopping habits.”

The UK government’s decision to scrap the VAT refund, which was announced in September, was also widely criticised by local businesses who feel it will drive tourists away.

Canadian human resources executive Muna Tamim, who lives in Dubai, was a regular shopper in London but will now opt for other EU countries to claim tax back.

“I went three times to London and did a lot of shopping there, especially at Harrods because they always have a good sale at Christmas,” she said.

Ms Tamim got a £400 refund on a handbag she bought at the shop during her last visit.

“I would rather shop in other European cities such as Paris, Rome and Milan.

“I hope they will cancel the decision because shopping is the nicest thing to do in London. But we have everything in Dubai so I could just shop here.”

Emma Graffagnino from the UK said she shopped in her home country because she could reclaim the VAT.

“I would always buy from the UK or somewhere else in Europe because it was cheaper,” said the Dubai resident. “If they remove the VAT refund, I will just buy elsewhere.”

Ms Graffagnino, 41, a deputy manager at a nursery school, often bought gifts for friends and family from Bristol.

“I bought a television for my dad the last time I was home and got a VAT rebate of about Dh500. It made such a big difference,” she said.

“It looks like I will be making those sorts of purchases outside the UK now.”

But another British resident living in Dubai said she would continue shopping in the UK.

“Things are so much cheaper in the UK anyway,” said Carolyn Belsey Morton, the owner of a musical instrument shop.

“I never bothered with the refund anyway because it was so much hassle.”