Tourists will be able to claim VAT back on goods bought in the UAE starting from later this year.
The UAE Cabinet approved a plan to create a refund system for tourists on Wednesday.
The tax refund system is designed to support the growth of the UAE’s tourism sector, according to a statement on Wam, the UAE’s state news agency.
"The system will be implemented beginning the fourth quarter of 2018 in cooperation with an international specialised company in tax recovery services," it added.
Non-residents will be able to obtain refunds VAT on purchases made at participating retailers from designated refund outlets.
It is not clear where those refund outlets will be, but in countries with established tax systems, such as the UK, they are typically located at airports.
The tourism sector is a significant contributor to the UAE’s economy. In 2017, it was equivalent to Dh154.1billion, which represented 11.3 per cent of the country’s GDP.
The number of passengers who passed through UAE’s airports reached 123 million in 2017.
“The announcement of this VAT refund directive is great news for visitors planning a trip to explore our extraordinary emirate," said Sultan Al Mutawa Al Dhaheri, executive director at the Department of Culture and Tourism – Abu Dhabi.
"Future visitors will now feel the direct impact of this decision in their travel budgets, meaning they can potentially stay longer, explore further and experience more while they are here."
Ajman also cut tourism fees earlier this month.