How to Claim VAT Refund in UAE
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.
The FTA states the various categories eligible to claim VAT Refund in UAE:
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.
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.
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.
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.
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
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.
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.
Foreign business VAT recovery process in UAE is longer and requires submission of more qualifications and supporting documents.
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.
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:
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:
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.
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.
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.
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.
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.
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