VAT is payable for the majority of goods and services that are bought in the UAE. The scheme, VAT refund in UAE, may be used for reclaiming VAT charges incurred while in the country if you are a VAT-registered entity with registration outside of UAE.
Who are eligible for a VAT refund intended for business visitors?
Only foreign businesses that meet these conditions are eligible in applying for a VAT refund for business visitors:
- Business visitors that are not taxable persons in UAE
- Business visitors that don’t have a fixed establishment or place of establishment within UAE or any GCC state
- Business visitors that don’t carry on business within UAE
- Business visitors that carry on a business that’s registered for VAT with a local competent authority within the jurisdiction where they’re established
The VAT refund scheme intended for business visitors in UAE isn’t available for the following:
- Foreign businesses that make supplies within the UAE unless the recipient is obliged in accounting for VAT using reverse charge mechanism
- Taxable persons with VAT charges incurred for goods and services that are considered non-recoverable as per the UAE VAT regulations, including motor vehicles for personal use and entertainment
- Foreign businesses that are from a country that doesn’t provide VAT refunds for UAE business entities in similar circumstances
Note: for businesses that are residents in GCC states that aren’t implementing VAT regulations, they can still send an application for a VAT refund under the scheme.
In what circumstances will business visitors claim VAT refund in UAE?
- Eligible business visitors claiming VAT refund in UAE are required the following:
- The minimum VAT amount for claiming VAT refund under this particular scheme is AED 2,000
- The period of refund claim is twelve calendar months with the exemption of applicants that are residents of GCC states that don’t implement VAT regulations
Read also: VAT Treatment For Motor Vehicles
What are the requirements for submitting a VAT refund application in UAE?
A foreign business visitor eligible in claiming a VAT refund in UAE will have to provide the following information:
- Original certificate of tax compliance, which may be its business status certificate or commercial activities certificate (must be in English or Arabic and issued by a competent tax authority reflecting tax registration number of the business attested by the UAE embassy within the country of the business’ tax registration
- information on whether the business is undertaking non-business or exempt activities in the country of establishment, not providing right in fully recovering input tax (declaration must be in English or Arabic indicating level or percentage of input tax the business is eligible in recovering for expenses
- All relevant tax invoices complete with the valid TRN or tax registration number, as well as proof of payment which supports the VAT refund claim under the scheme for business visitors. Remember that any invalid tax invoice is going to be rejected by the Federal Tax Authority in UAE e.g. having an incorrect tax registration number
- Proof of authority from an authorized signatory
- Copy of passport for authorized signatory
Note: original hard copies for all invoices including proof of payment have to be submitted together with the duly completed form for VAT refund application in UAE. Scanned and system-generated tax invoices are acceptable as the original. The invoices will require proof of payment which should be in a receipt form attached to a stamp or invoice or a tax invoice, which is considered paid with the details of the supplier on the stamp.
Update for April 2021 on VAT Refunds for Business Visitors
- Certificate of incorporation will no longer be necessary, but a self-declaration will be required for businesses that are not entitled in claiming full input tax in their home country unless official letters can be provided stating extent in percentage for input tax recovery has been obtained from a competent tax authority within the businesses’ home country.
- Tax invoices will now be accepted to be hard copies for tax invoices or sent through email for the purpose of submitting a VAT refund claim. In addition, hard copies of documents will now only be retained for six months by the Federal Tax Authority. After this period, documents will all be disposed of unless the application includes prepaid envelopes.
Read also: Penalties For VAT Deregistration In UAE
Regulated Tax Agents in Dubai, UAE
If you are not sure if your country has a reciprocal arrangement with the FTA for VAT refunds, contact regulated tax agents in Dubai, UAE to confirm. Note that foreign businesses are only entitled to a VAT refund with respect to expenses that are incurred after or on the effective date of the agreement between UAE and the businesses’ home country.
To know more about VAT refunds in UAE for business visitors and your eligibility to claim VAT charges incurred while in the UAE, speak to our tax specialists. At VAT Registration UAE, our seasoned tax professionals can provide advice and guidance on all tax-related matters.