VAT Refunds for Businesses in UAE

Businesses that are operating in UAE can now get VAT refunds within the 1st tax period after receiving invoices and forming intentions in paying for the supply. VAT refunds in UAE may now also be following the current tax period. 

VAT-registered businesses in UAE can recover input tax in a timeframe extended by the Federal Tax Authority (FTA), making it incredibly easy for businesses to claim input tax as per the clarification recently released. 

This means cash flows of businesses are significantly freed up, especially those that didn’t meet the conditions within FTA-prescribed timeframe prior to the clarification. 

New conditions by the FTA for VAT refunds 

The input VAT of a company may be recovered in a tax period in which the following conditions are being satisfied: the tax invoice has been received and the intention in making the payments for supply prior to expiration of 6 months following the agreed payment date is formed. 

Hence, input tax amount eligible for recovery will play a significant role in operating expenses and cash flow under VAT. The FTA has not provided clarification that the intention in making payments is formed upon completion of internal approval processing for invoices. 

The clarification has proven to be a huge relief for tax payers as they are provided an extended time in recovering input tax credit. 

Other UAE tax policies in response to COVID-19 pandemic 

Other tax measures were announced by the UAE government in order to ease global economic effects of the COVID-19 pandemic. Customs and taxation measures that were announced by authorities which provide tax payers a much-needed relief include:

  • A refund of twenty percent on customs fees that were imposed on all imported products that are sold locally in markets, the cancellation of the fifty thousand dirham (AED 50,000) cash or bank guarantee required in undertaking customs clearance, and the reduction of fees that are imposed on the submission of customs documents for up to ninety percent 
  • VAT refunds for foreign-owned companies – the refund window has been opened for non-UAE established companies in submitting VAT refund requests onto the tax authority for calendar year 2019. Federal Tax Authority will be accepting applications for VAT refunds until 31st of August 2020, which means eligible businesses are to assess whether they’re qualified for VAT refunds. If so, they are to begin calculating amount of VAT in UAE they are able to reclaim as quickly as possible.
  • The FTA confirmed VAT registrants with monthly tax periods are to submit returns and settle payable tax no later than 28th of May 2020. For VAT registrants with quarterly tax periods, they are to submit returns and settle payments for VAT by 28th of May 2020. This was already postponed by authorities, so tax payers are expected to have accurate data in reports.

Refunds in hotels and shopping malls for tourists 

There is also a VAT refund scheme for tourists provided for by the FTA with their VAT Recovery for Tourists Self-Service Kiosks. The said kiosks are available in hotels and major shopping malls apart from the existing ones that are in exit/entry ports for air, maritime, and land across UAE.

The expansion aims in providing tourists who are in UAE additional services while also enhancing the status of the UAE as the leading destination when it comes to international tourism. The company that was authorized by the tax authority in UAE in operating the E-Systems for tourists’ tax refunds, Planet, debuted nine kiosks in the first stage of the plan implementation. They have already made self-service kiosks functional and readily available in multiple tourist-laden shopping malls and hotels across the region. The kiosks are all equipped with the latest state-of-the-art technology, which means they are allowed in fully processing the VAT refund requests of tourists visiting the country. 

The FTA explained that the self-service kiosks allow applicants in scanning their boarding passes in proving that they’ll be leaving UAE in 24 hours. The original passport or the identity card for a GCC national will be recognized as well. The self-service kiosks will provide simple instructions in the machines. It is expected that more than fifty new kiosks will be set up across the country in this year alone with thirty stationed in hotels and twenty five in malls. 

Do you require help related to VAT in UAE? Consult with our tax specialists here in VAT Registration UAE!

How can I process my VAT refund application?

VAT refund applications in UAE can be sent in the e-Services Portal of the Federal Tax Authority. This applies to VAT-registered entities in the country. If you want to make sure that you are inputting accurate details in the application, have a regulated tax agent in Dubai review the application prior to its submission. 

Can I claim my VAT refund at the Dubai airport?

Yes, tourists can get VAT refunds at designated refund points, including in the Dubai International Airport.