The UAE VAT refund system is structured to allow businesses that are not intended to bear the burden of VAT such as foreign businesses, international travelers’, and certain government bodies to reclaim VAT paid on eligible expenses. For most businesses, this relief is provided through input VAT recovery as part of the standard VAT return filing process. However, in exceptional circumstances, specific refund requests may be required.
A comprehensive understanding of the VAT refund process in the UAE begins with recognizing the eligibility criteria. The Federal Tax Authority (FTA) clearly outlines which expenses qualify for VAT recovery and which do not. For example, input VAT incurred on expenses directly related to taxable supplies is generally recoverable, whereas VAT paid on entertainment costs or non-business-related expenditures is not.
Who can Claim for VAT Refund in UAE?
In determining who can claim a VAT refund in UAE, it’s important to consider different categories of claimants eligible for a VAT refund. The UAE has specifically arranged special provisions for different entities and situations. The most common categories are given below:
1. VAT-Registered Businesses
For the majority of registered UAE companies, VAT refunds are automatic on filing the regular VAT return. If the input tax (VAT incurred on purchases) is more than the output tax (VAT received on sales), the business can either carry over the excess to subsequent periods or claim a refund.
UAE VAT refund can be requested by companies for:
- Capital expenditure (e.g., machinery and equipment
- Operating expenses (i.e., office supplies and utilities)
- Professional expenses (i.e., accountancy and solicitors’ fees)
However, VAT on non-deductibles like cars used for private use or entertaining employees cannot be recovered.
2. Tourists
Travelers to the UAE are also eligible for a VAT refund in UAE on goods purchased while they are there. Refund is organized via an electronic system within specified retail outlets and airport refund points. The system, run by Planet in collaboration with the FTA, allows travelers’ to reclaim a proportion of VAT paid on items purchased when departing the country.
3. Foreign Businesses
Non-registered VAT foreign companies that are not deemed permanently resident within the UAE are eligible for refund under the Foreign Business VAT Refund Scheme. The same is in the majority of situations reserved for those nations whose companies provide UAE companies with similar VAT refund facilities.
The following is required to be fulfilled by the applicant:
- Be doing business in a country that grants UAE companies reciprocal treatment
- Do not have permanent address or fixed place in the UAE
- Do not issue taxable supplies within the UAE (except reverse charge)
4. Diplomatic Missions and International Organizations
Diplomatic missions and international organizations recognized by them are entitled to claim a VAT refund claim UAE under bilateral agreements. They may submit supporting documents to the Ministry of Foreign Affairs and International Cooperation (MoFAIC), which then coordinates with the FTA.
5. UAE Nationals Building New Houses
UAE nationals building a new house to be used by themselves can also recover VAT on building materials and services. The claim must be made within 12 months of the date of completion of the property, and the recovery will be limited to qualifying costs like contractor charges and building materials.
VAT Refund Process in the UAE
Understanding the VAT refund process in the UAE entails both a general view of steps and category-specific steps for the intended purpose of the applicant. The process is easy but documentation and timing are involved.
1. VAT Refund Process For VAT-Registered Businesses
- File VAT Return: Submit your VAT return via the FTA portal.
- Excess Input Tax: If you have more input tax than output tax, you can have it refunded rather than pay the difference.
- VAT311 Form: Fill and submit the VAT refund form within the FTA dashboard.
- FTA Processing: FTA processes the request and can request supporting documentation.
- Issue of Refund: The refund is issued to the business account after approval.
2. VAT Refund Process For Foreign Businesses
- Download Refund Form: Foreign Business Refund form to be downloaded from FTA website.
- Prepare Supporting Documents: Tax invoices, proof of payment, and certificate of incorporation.
- Submit Within Deadline: Applications to be submitted no later than 6 months from the end of the calendar year in which the VAT was incurred.
- FTA Decision: Refund is affected after verification and typically takes a couple of months.
3. VAT Refund Process For Tourists
- Shop at Registered Outlets: Check whether the store is registered for VAT with Planet VAT refund scheme.
- Obtain a Digital Refund Slip: The digital slip will be issued by the cashier against your passport.
- Proceed to Refund Counters: Present your purchases and slips at the airport prior to your departure.
- Choose Refund Option: Refund can be claimed in the form of cash or credit card after deducting a small processing fee.
4. VAT Refund Process For International Organizations and Diplomats
- File through MoFAIC: Fill the refund application on the Ministry website.
- Verification: Approval by the Ministry and transmission of the application to the FTA.
- Refund Payment: Upon approval, the amount is transferred through official channels.
Conditions and Documents for VAT Refund Claim
Maintenance of proper documents and compliance with FTA regulation are most important points for a successful VAT refund claim. The following conditions should be fulfilled by the applicants:
- Valid Tax Invoices: Must bear TRN, VAT amount, and other invoice information.
- Proof of Payment: Payment receipts or bank statements showing the purchase.
- Correct Categorization: VAT directly attributable to taxable business operations or eligible categories.
- Fast Filing: Filing on time is mandatory, otherwise the claim might get rejected.
Foreign companies will also have to have documents translated into Arabic. During the verification, the FTA may seek clarification or more details, and thus it would be wise to keep neat, soft copies of all documents involved.
How to Apply for VAT Refund in UAE Efficiently
While making choices regarding filing VAT refund in UAE, it is advisable to adopt a systematic approach and timely steps. Best practices are as mentioned below:
- Be Record Ready: Get the newest and accurate records for each and every transaction.
- Use the FTA Portal: Familiarize yourself with the FTA dashboard and from whose account all returns are submitted.
- Monitor Deadlines: Note all the refund timelines and make the submissions well before permitted timelines.
- Seek a Tax Professional: Having a tax consultant helps avoid errors and makes you understand your eligibility and obligation.
- Check FTA Guidelines: Always refer to the most current guidelines published by the FTA, since rules may be updated over time.
Common Errors to be Avoided while Preparing VAT Refund Claim UAE
Even genuine claimants’ claim becomes disallowed on account of avoidable mistakes. Some of the common errors are:
- Filing incomplete documents
- Claim of VAT on non-deductibles
- Delayed filing
- Inconsistency in use of TRNs or invoice numbers
- Claiming under incorrect refund category
These errors can be prevented by making sure your VAT law information is up to date and fact-checking prior to submitting a VAT refund claim UAE.
Get Professional Advice from VAT Registration UAE
Whether it involves a registered business seeking to recover excess input VAT, a tourist reclaiming VAT on eligible purchases, or an international company conducting business in the UAE, understanding the proper procedure for claiming a VAT refund is essential for maximizing entitlements and ensuring compliance with VAT laws. Timely submissions, adherence to the correct format, and the inclusion of all required documentation are key to making the VAT refund process both efficient and beneficial. To facilitate smooth transactions and ensure full compliance with Federal Tax Authority (FTA) guidelines, it is advisable to engage professional assistance, such as experts in VAT Registration UAE, thereby avoiding errors that may lead to delays or rejection of the refund claim.
FAQs: VAT Refund in UAE: Who Can Claim and How to Apply
Q1: Who is eligible for a VAT refund in the UAE?
Foreign firms operating in member states, foreign companies, diplomats, tourists, and UAE citizens building new residences are eligible for a VAT refund as long as they qualify with the Federal Tax Authority.
Q2: What needs to be filed for a VAT refund?
To be qualified for a VAT refund, you would need to have legitimate tax invoices, payment receipts, a VAT registration certificate (if applicable), and documents based on your refund category (e.g., UAE nationals and building contracts).
Q3: How long does it take to obtain a VAT refund in the UAE?
For registered firms, usually 20 working days from date requested. Foreign business refund and special cases (including diplomats or constructors of new houses) will be longer based on complexity and document authentication.
Q4: Will visitors receive VAT refund in UAE?
Yes, consumers are also allowed to claim VAT refund on shopping from malls participating with their electronic tax invoice slips and passports at airport refunding points while departing. There is a minimal charge on the processing fee.
Q5: Is there any deadline within which a VAT refund claim can be submitted in the UAE?
Yes. Generally, foreign business including refunds, submission of application within 6 months at the end of the calendar year when VAT was incurred. If in the case of UAE nationals building houses, 12 months is to be counted from the date of completion.
Read Also: How to Claim VAT Refund For Exports in Dubai
