VAT is an indirect tax imposed at every stage of the supply chain and then passed on to the end consumer. However, businesses as well as some individuals, foreign tourists, foreign companies, and UAE nationals can recover VAT on eligible projects, paid on their transactions if the same are eligible as per the conditions stipulated by the Federal Tax Authority.
In the UAE, the VAT refund scheme has a broad base of individuals who are eligible to claim it. These include businesses registered for which the input VAT (VAT incurred on purchases) is more than the output VAT (VAT charged on sales), tourists departing the country, foreign companies that have no local presence, diplomatic missions, and UAE nationals building new houses. In this article, you will get to know about how to claim VAT refund in UAE, including eligibility criteria, procedures, and key points to keep in mind for a successful refund application.
Who is Eligible to Get VAT Refund in UAE?
The FTA states the various categories eligible to claim VAT Refund in UAE:
1. VAT-Registered Businesses
VAT registered businesses that submit VAT returns from time to time are subject to repayment in the instance where input VAT is higher than output VAT over any tax period. This mostly happens when businesses have incurred large investments or purchases against sales.
2. Visitors Entering into the UAE
Under the Tourist Refund Scheme, a refund facility for a portion of the VAT paid on purchase at arrival is available to non-resident tourists. This facility can be enjoyed at special refund counters at departure points from UAE airports.
3. Foreign Businesses
UAE resident foreign companies having a VAT in the UAE may be entitled to a refund under the Foreign Business Refund Scheme if they meet certain criteria such as not maintaining a fixed place of establishment within the UAE and being a UAE country business engaging in reciprocal transactions with UAE businesses.
4. UAE Nationals Constructing New Homes
UAE nationals constructing new houses to be occupied by themselves can claim refund of VAT charged on building work and materials, under a special application for house construction works.
5. Diplomatic Missions and International Organizations
A few embassies and select international organizations having presence in UAE are also qualified to claim VAT refund on refund on their purchase, under international treaty and agreement.
Read Also: VAT Refunds for Foreign Businesses
How to Claim VAT Refund in UAE for Registered Businesses
Among all business forms, UAE registered businesses file the majority of the VAT refund claims. To be eligible for how to claim VAT refund as a business starts with VAT return filing on regular intervals using FTA online portal.
Step-by-Step Procedure for Registered Businesses :
- FTA Portal Login: Firstly, businesses must login into their online account through the FTA website using registered login credentials.
- Verify VAT Return: While filing VAT returns, in case output VAT is lower than input VAT, by default surplus refundable amount will be reflected.
- Upload VAT Refund Form (VAT311): User will fill and upload the Form VAT311 via VAT portal for the purpose of claiming the refund. Form VAT311 is with details of refund amount claimed, phone number, etc., and bank account details.
- FTA Assessment: Federal Tax Authority will act on the application and can request supporting documents to authenticate the claim.
- Refund and Payment Approval: FTA will repay the amount of refund approved in the applicant’s account. It will be completed within 20 to 45 working days.
How to Claim VAT Refund in UAE for Tourists
Make payment tourists’ spending money in the UAE qualify for claim VAT refund on purchases from shopping at participating retail outlets. Tourist Refund Scheme is a computerized and electronic scheme provided by the FTA with collaboration from Planet, the tourist refund operator.
Step-by-Step Procedure for Tourist:
- Shop at Participating Outlets: Tourists should shop at the participating retailers of the VAT refund scheme and request an electronic tag-free tax at point of sale.
- Validate Purchase at Airport: The traveler must present his/her passport, boarding pass, and tax-free stamp to a planet validation machine in the airport.
- Select Refund Option: Refunds can be collected in cash (up to a limit) or credit card. A minimal handling charge is taken before handing the refund.
How can International Business Claim VAT Refund in UAE?
Foreign business VAT recovery process in UAE is longer and requires submission of more qualifications and supporting documents.
Step-by-Step Procedure for International Business:
- Download and Complete Refund Form: Non-resident business must utilize the standard form of refund issued by FTA for non-resident business.
- Submit Supporting Documents: Supply evidence of payment, tax invoices, bank account, and trade license or incorporation certificate.
- Submit Application Yearly Basis: The claim is to be submitted within six months from the end of the last date of the calendar year for which the VAT was incurred.
- Review and Refund by FTA: FTA shall review the claim and, upon sanction, refund the same through bank transfer.
How to Claim VAT Refund in UAE for UAE Nationals Constructing New Houses
UAE nationals, who are building new residential units for occupation, can recover VAT incurred on construction expenditure such as consultancy fee, building and contractor material used to build.
Step-by-Step Procedure for UAE Nationals Constructing New Houses:
- Register and Log into FTA Portal: The users need to open or login user account on FTA website.
- Visit Housing VAT Refund Section: Click on the link “VAT Refund on New Residences by UAE Nationals“.
- Submit Form with Supporting Documents: Upload title deed, building invoices, completion certificate, Emirates ID, and payment evidence.
- FTA Review and Transfer: Money checked is credited to the applicant’s bank. It takes around 20–45 working days.
Major Documents to File VAT Refund Claims
No matter if you are a resident, tourist, or businessman, successful VAT refund claims all depend on accurate and complete documents. Major documents required are:
- Compliant tax invoices with supplier Tax Registration Number
- Bank account details
- Passport or Emirates ID copy (individuals)
- Business license certificate and incorporation certificate (companies)
- Completion certificate and title deed (UAE nationals undertaking property developments)
- Proof of payment (e.g., bank statements, receipts)
- Ensure readability, integrity, and Arabic-translation wherever required for all the documents mentioned above will avoid delay in processing.
Key Points to Keep in Mind upon Submissions of VAT Refund
While it is important to know how to prepare VAT refund, applicants must also be aware of the most frequent errors and pitfalls. These are:
- Late application after the given time
- Adding non-refundable items, e.g., own expenses or entertainment
- Failing to present inadequate tax invoices
- Wrongly submitting incorrect bank details or documents
Seek the Expert Services of Premier VAT Consultants in UAE
To mitigate these risks, people and businesses are advised to maintain proper records, revise FTA guidelines from time to time, and seek the advice of a tax expert whenever necessary. If you’re looking for professional services with VAT Registration UAE, contact us today and we shall be glad to assist you.
FAQs: How to Claim VAT Refund in the UAE
Q1. Who are the individuals eligible for a VAT refund in the UAE?
Among the ones who qualify for refund are VAT-registered businesses, tourists, overseas companies without a presence in the UAE, UAE nationals who are building new homes, and diplomatic missions. Refunds for every one of them is done through an independent refund process and paperwork.
Q2. How much time does it take for VAT refund in the UAE?
The VAT refund processing is done within 20 to 45 working days from the date of application if the documents are correct and in proper order. The refund for international businesses will be more delayed as there are more verification processes.
Q3. Are tourists eligible for VAT refunds in the UAE?
Yes. The Tourist Refund Scheme allows tourists to claim UAE VAT at UAE airports by scanning their Planet kiosk shopping and showing their passport, boarding pass, and receipts.
Q4. What is the time limit for claiming a VAT refund?
Time limits are different for each category. For instance, non-resident enterprises ought to file within 6 months from the end of the calendar year, while UAE nationals building residential complexes ought to file within 12 months from the date buildings have been completed.
Q5. What are supporting documents for VAT refund claim?
The supporting documents can be valid tax invoice, proof of payment, identification, bank details, and in the event of company entities, a TRN and business license. The supporting documents may be needed depending on the category of the refund.
Read Also: How to Claim VAT Refund For Exports in UAE
