In September 2019, the government of the United Arab Emirates (UAE) issued an updated guide on VAT refund for businesses and tourists in the UAE. According to the updated law, now tourists, foreign companies, and UAE citizens constructing residential buildings can apply for a VAT refund.
Presently all registered businesses need to file VAT return directly on the official FTA website. After the online submission of the refund claim, the FTA processes the application and refunds the amount accordingly. Additionally, the FTA also passed ‘The Tourist VAT Refund Rule’ on 18th November 2019, allowing tourists in the UAE to claim VAT charged on purchases made in the country.
In this article, we will explain everything there is to know about VAT refund policies in the UAE. Let’s get started!
How to Claim VAT Refund in UAE – All you need to know
Whether you are a registered business owner, a resident constructing a residential building, or a tourist in the UAE, you can claim for VAT refund incurred on the purchase of goods in the UAE. Here is everything you need to know to claim a VAT refund in UAE.
VAT Refund for Foreign Businesses
Dubai is the global hub of economic activities and business. To support foreign companies in the UAE, the government announced a refund policy under VAT in UAE. Under this scheme, foreign businesses can apply for a VAT refund incurred on expenses in the UAE, e.g., purchase of goods and services, travel, lodging of employees, etc.
If your business is trading cross border, you need to take into account the amount of VAT incurred so that you can recover excess VAT paid. For this you don’t have to be in the UAE, you can hire a VAT consultancy in Dubai to help you recover VAT while you are overseas. This way, you can calculate excess payments on different kinds of expenditures and apply for a VAT refund.
VAT Refund for Construction of New Residences
Good news for UAE Nationals!
Now, UAE nationals can also claim VAT refunds for the construction of new residences under certain conditions. This scheme is called “The New Residence Construction VAT Refund Scheme.” Under this scheme, UAE nationals who construct a new building solely for residential purposes can apply for a refund of VAT paid on the expenses of construction of the residence.
You cannot make a refund claim if the building is to be used for non-residential purposes like a hotel, hospital, or a guesthouse. Remember, the refund can be claimed within 6 months from the date of completion of the building. So, don’t waste any time, get VAT services in Dubai today to claim your refund.
VAT Refund for Tourists in UAE
Tourists in the UAE can submit a VAT recovery request on the taxes that have been paid on the purchase of goods within the country. Applicants need to submit a tax invoice that is issued by the retail outlet on the purchase of products.
No limit is placed on the recovery of the tax that was charged on the credit card of the tourist. However, if the tourist wants a refund in cash, then the maximum amount recovered is AED 7,000 per day. This can be done at the tax refund office or by getting the help of a VAT consultant in Dubai. Last year, the government introduced several kiosks across all tourist points to recover VAT.
Goods not eligible for VAT Recovery
Tourists in the UAE can get a refund on VAT except for products and services that fall under these categories:
1. Motor Vehicles, Aircraft, and Boats
2. Goods that are consumed fully or partially in the UAE
3. Goods that are consumed in any implementing GCC state
4. Goods that the applicant doesn’t have with them by the time they leave UAE.
Eligibility for VAT refund for Tourists in the UAE
Remember, not all tourists are eligible to reclaim VAT on goods that were purchased in the UAE. Under current legislation, a tourist is eligible for a VAT refund if they fall under these categories:
1. GCC Nationals
2. Tourists aged 18+ and are not UAE residents
3. Not part of crew members of flights that leave UAE.
We recommend all the tourists to take time and consult a professional VAT agency to process validation of VAT refunds before departure. Don’t hesitate to get in touch with the best VAT consultancy in Dubai to make sure you get all the refunds you deserve.
Process of Claiming VAT Refund in UAE
All registered businesses in the UAE can file for a Vat return by providing details of sales and purchase of goods, output VAT, and input VAT during the tax period. To read a comprehensive guide on filing VAT return, read “How to File VAT Return in UAE and Pay VAT.”
Here is a brief process of how registered businesses in the UAE can claim VAT refunds in the UAE.
After adjusting Input and output VAT, if your company has excess input VAT, you will get an option to request a refund. If you do not wish to request a refund, then the recoverable VAT amount will be carried forward to the next tax period and will be used to offset against payable tax.
If you want to request a refund now, then submit the VAT return and complete the VAT refund application form, i.e., “Form VAT311.” The following are some of the major steps of submitting the form:
1. Login to FTA e-portal service using your registered username and password.
2. After successful login, to access the form, go to the ‘VAT’ tab and click the ‘VAT Refund’ option.
3. After that, click ‘VAT Refund Request.’ The refund form will open.
4. Now you need to fill in all the details of the form. The following are some of the available fields on the form that you need to fill:
a. TRN, Legal Name of Business/ Entity: This section is auto-populated based on your user information and previous details. Please check before submission that details are accurate.
b. Total Amount of Excess Refund Tax (AED): This section is also auto-populated based on your excess refund report and administration penalties, if any.
c. The Refund Amount (AED): In this section, you enter the amount you wish to refund. Make sure the amount is equal to or less than ‘Total Excess Refundable Tax.’
d. Remaining Amount of Excess Refundable Tax: This part is also auto-populated, and you can apply for this refund in the future.
e. Late Registration Penalty Amount (AED): This section is also auto-populated, depending upon your previous administrative penalties imposed on late registration or not.
f. Authorized Signatory and Declaration: In this section, the authorized signatory will be auto-populated; you need to tick the declaration before submitting the form.
g. Once you have completed the form and checked all the elements, click on the ‘Submit’ button.
After submission of the form, the VAT refund claim will be processed as per FTA guidelines. During the process, you will get an email notification from FTA, and the amount will be refunded once your claim is approved. To avoid committing mistakes in the application, you MUST consult a VAT expert regarding refund claims to make sure you follow all the FTA guidelines and don’t face any administrative penalty.
Claim your VAT Refund Today!
In the first quarter of 2019, the consumer confidence survey revealed that after the implementation of VAT refund laws, businesses in the UAE are more confident about their finances. Hence, concerns regarding VAT in the UAE corporate world are lessened, as compared to the start.
If you are a registered business in the UAE, a tourist, or a UAE national who has just constructed a residential building, apply today for a VAT refund. Keep your tax invoices safe, get in touch with a professional VAT consultancy in Dubai, and apply for the refund before time runs out!