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