Tourists are one of major sources of income for UAE, especially for Dubai. As per the proposed VAT system to be implemented in UAE, tourists can not reclaim VAT back while leaving the country. This will make various products under VAT purview a minimum of 5% higher for tourist customers also.
Tax authority says proposed VAT rate of 5% is very less compared other countries thereby charging very less amount to torist customers. Many countries which allow VAT refund normally charges high VAT rate (eg. VAT in UK is 20%) and allow VAT refund partially.
VAT in UAE is going to implement with effect from 01-01-2018.