VAT refund from UAE
In UAE, it is mandatory for every taxable person to file a VAT return to the FTA. The need of applying for a VAT refund UAE arises when the input tax exceeds the output tax on the VAT return. When the taxable person makes the claim on the excess refundable tax, FTA will take some time to review the application and do the proceedings. The authorities need to scrutinize the application strictly and make sure that the refund application is submitted in the correct format directed by the FTA.
The VAT refund form consists of the following fields which should be filled carefully while applying for a UAE VAT refund:
• TRN (Tax Registration Number) – This field requires information about the account number of the taxpayer.
• Total amount of Excess Refundable Tax (in AED) – This field is based on the formula Refunds – Penalties = Excess Refundable Tax. This covers all refunds reported in past VAT returns, as well as any administrative penalties owed, with the exception of the late registration penalty.
• The amount requested to be refunded – The amount mentioned in this field must be less or equal to the amount displayed on the Excess Refundable Tax field.
• Remaining amount of eligible Excess Refundable Tax – This felid consists of the leftover amount of refundable tax which you can apply for in the future.
• Late registration penalty amount – This field consists of the information of the amount of penalty you have been charged with and whether you have settled it or not.
• Authorized signatory and declaration – In this field, you need to carefully read and strike on the yes column. It can be done both in Arabic and English.
In what circumstances can you claim a Refund?
Input VAT is the tax payable for items bought by a business or a taxable person, whereas output tax is the tax that is collected from the sale of items by a business or a tax-paying individual in Dubai. You can claim for VAT refund when your company is paying more tax as compared to the tax your business is collecting.
When your input VAT is greater than the output VAT then you can apply for a VAT refund Dubai.
Timeline for VAT refunds
Once a taxpayer has submitted the application for VAT refund UAE, FTA takes 20 business days to review and process it. Anyways, the FTA will inform whether the claim on the decision has been accepted or rejected. Moreover, FTA will also notify if there is an extension from the deadline required.
List of Documents Required for Claiming a VAT Refund in the UAE
Following are the documents for claiming a VAT refund UAE:
• Original Tax Compliance certificate
• Declaration mentioning the amount of input tax you will receive to recover on expenses.
• Tax invoices that contain the valid tax registration number and proof of payment.
• Copy of passport of the Authorized Signatory
• Proof of Authority of the Authorized Signatory
Can all business visitors apply for a VAT Refund in the UAE?
No, not all business visitors are eligible to apply for a VAT refund UAE. However, after fulfilling the following requirements a foreign business can apply for a refund –
• The foreign business should not have any permanent or temporary presence in the UAE or an Implementing State (GCC countries where VAT is implemented)
• In the UAE, the foreign business should not be considered as a taxable person.
• A foreign business should not be conducting business in the UAE.
• The applicant must operate a business and be registered as an establishment with the appropriate government in the jurisdiction where they are located.
How to claim VAT Refund in UAE for Businesses?
To claim a VAT return UAE for business, the following steps need to be followed –
• Log in to FTA’s portal by using your user id and password.
• Go to the VAT tab, then click on the VAT Refunds tab, and then you will get the form after clicking on the VAT refund request.
• Fill the form by providing all the correct details. Some of the fields might be pre-filled using your account details, make sure that the information is correct. Click ‘Submit’ to proceed.
• After that you will get a mail from FTA to notify you about the result of the refund application applied by you. The refund will be processed in 5 working days, once the refund claim gets approved.
• You can confirm the VAT refund amount given to you by going to the My Payment tab in the e-services portal.
Who is Not Eligible for VAT Refund in the UAE?
The company VAT returns UAE scheme does not allow a foreign travel operator to obtain a tax refund. As a result, the company VAT return scheme is appealing to foreign enterprises visiting the UAE. While the structure for a VAT refund mechanism has been established, it has yet to be implemented. As a result, the full method for obtaining a refund under this scheme is now unavailable and will be provided at a later date.
UAE Updates VAT Refund Guidance for Business Visitors: What’s in it for you?
The tax authority in UAE has updated a few guidelines for applying the VAT return Dubai. Following are the points that reflect the changes –
1. When a country is added to the list of countries with reciprocal agreements for VAT refunds for business visits, the effective date for foreign enterprises to claim VAT refunds changes.
2. Documentation requirements for requesting a VAT refund UAE where a certificate of incorporation is no longer needed.
3. System-generated and scanned tax invoices will be accepted as original tax invoices and may be emailed to the appropriate tax authority and hardcopies no longer required.
4. Separate publication of the list of countries having reciprocal arrangements for VAT refunds for business visitors.
The refund scheme is not suitable for businesses that are registered for VAT in UAE. However, a firm may be needed to have non-resident linked entities that incurred VAT in the UAE in 2020, in which case these confinements may apply. The new regulations may provide an opportunity for these businesses to claim input VAT that would otherwise be viewed as a “sunk cost.”
VAT Consultancy Services in Dubai
Elevate Auditing is a VAT consultant in UAE registered with FTA. Our professionals have great experience in providing services like VAT filing, VAT refund application, VAT Refund Services, and VAT reconsideration. We can assist you in obtaining tax compliance, carrying out legal tasks, maintaining records, and preparing and filing VAT returns throughout the various phases of VAT implementation in the UAE. At Elevate, the tax and business advisors in UAE will evaluate the eligibility for VAT refund UAE and assist you in executing the proceedings with the existing rules. We as a VAT Agency services provider can help your company build and improve business processes and cut down on the time and expenses of filing claims.