The foreign businesses are now allowed to claim the expenses incurred against VAT in the UAE subject to the terms and conditions that have been laid out by the Federal Tax Authority. The FTA has recently issued the guidelines that revised the conditions for business visitors to apply for a VAT refund. As per the new rules issued, the refund scheme applies to the foreign businesses from the countries that permit VAT refund to UAE entities. Uninformed businesses can also get help from VAT consultants in the UAE to apply for VAT refunds. Through this article, we will be outlining the guide or the process through which business visitors can claim a refund on the VAT that they have paid while they are in the UAE and how VAT registration UAE can help them in reclaiming the VAT amount paid by them.
Is VAT refund allowed for all Business visitors in the UAE?
The answer to the above question is no. the FTA has set out a few conditions and only those who meet the specified conditions are allowed to claim for VAT refund in Dubai. The foreign businesses who can apply for VAT refund in the UAE have to meet the following criteria-
- The foreign businesses should not be having any fixed establishment in the UAE or an implementing state (GCC countries which have VAT laws implemented already)
- The foreign businesses should not be having any taxable person in the UAE
- Foreign businesses should not be carrying out any kind of business in the UAE
- The applicant must be having a business or must be carrying out a business and it is mandatory for the applicant to be registered as an establishment with a competent authority in the jurisdiction where their company is established.
Ineligible applicants VAT refund in the UAE
While applying for a VAT refund in the UAE, the businesses must ensure that they are eligible for a VAT refund in the UAE. If a business applying for a VAT refund in Dubai meets any of the following situations or criteria, it means they are not eligible for a UAE VAT refund.
- Foreign businesses who are making a taxable supply in the UAE, unless they are accounting for VAT under the reverse charge scheme.
- The foreign business belongs to a country that doesn’t allow VAT refunds to UAE companies under similar situations.
- The foreign business is a non-resident tour operator.
- The input tax that has been incurred on goods and services is non-recoverable by the taxable person as per the Vat laws in the UAE. Example- entertainment and motor vehicles available for personal use.
Circumstances in which VAT refund can be claimed?
The FTA has laid down the time period and the conditions in which the VAT can be claimed for a refund for reducing the administrative burden on business travelers. These conditions are-
- The period of each refund claim has been fixed as 12 months (except for the applicant who is resident in the GCC states that are not implementing states)
- The minimum amount for which the applicants can claim for VAT refunds under this scheme has been fixed as AED 2000.
Documents required for VAT refund in the UAE
In the process of claiming the VAT refund in Dubai, the business visitors will be asked to submit a list of documents. It is advisable for the applicants to consult VAT registration UAE to have a clear picture of the paperwork as well as the procedure for claiming VAT refunds in the UAE. The list of documents required for the same are-
- Original certificate of tax compliance in Arabic or English issued by a relevant tax competent authority. This could be documents such as business status certificates, certificates of commercial activities, or equivalent. This certificate must mention the business entity’s tax registration number or the TRN number and must be attested by the UAE embassy in the country of tax registration.
- A declaration in English and Arabic stating the percentage of input tax that the applicant is eligible for on the expenses. This is applicable when the business visitors undertake activities that are exempt or non-business activities in the country of establishment, which do not give it the right to fully recover the input tax.
- The relevant tax invoices reflect the entity’s TRN number as well as the proof of payment to support the VAT refund claim. The FTA will reject invalid tax invoices such as invoice that has an incorrect TRN number or an incorrect amount.
- Copy of passport of the authorized signatories.
- Proof of authority of the authorized signatories.
The FTA now also gives you the option of submitting system-generated invoices as well as scanned copies of the invoices. These can be emailed directly to the FTA. The authority also asks only for the tax compliance certificate. The original incorporation documents of the business are no longer needed.
When the application for a VAT refund has to be submitted to the FTA?
As mentioned above, the period of claim for each refund is a calendar year, the opening date for applications is March. For example, a refund for the period from 1st Jan 2021-31st Dec 2021, the FTA will accept applications from 1st Mar 2022. The deadline for submission of refund claims is 31st August each year. However, this rule of calendar year restriction is not applicable for businesses that are resident in any GCC state that is not considered to be an implementing state according to UAE legislation.
How VAT registration can help business visitors with a VAT refund in the UAE?
The revised guidelines issued by the FTA for VAT refunds for business visitors have been welcomed by the business communities. Foreign businesses are now relaxed as they now have less burden when it comes to submitting the documents for VAT refunds in the UAE. The applicants may still have to face an issue in terms of delays and rejection in case the process has not been carried out properly as per the FTA rules. Therefore, VAT registration UAE is at your service when it comes to VAT refund claims for business visitors in the UAE. call us today and we will guide you through this process.
