Guide to Commercial Activities Certificate under VAT in UAE

Since VAT was introduced in the UAE in 2018, the Commercial Activities Certificate (CAC) has become an important tool for businesses engaged in cross-border transactions. Responsibility for issuing the certificate now sits with the Federal Tax Authority (FTA), having previously been handled by the Ministry of Finance, a shift that’s simplified the process considerably since the FTA already holds the relevant VAT registration details for the businesses applying.

This guide covers what a Commercial Activities Certificate is, how to apply for one, the documents required, a worked example of how it’s actually used, and common mistakes that delay applications.

What Is a Commercial Activities Certificate and Why Is It Required?

A Commercial Activities Certificate is a document that allows the holder to claim a refund on VAT expenses paid outside the UAE, regardless of whether a Double Taxation Avoidance Agreement (DTAA) applies to the relevant country. Also referred to as a certificate of status, it confirms the holder is a genuine registered business or business person in the UAE, and it’s specifically what allows the holder to reclaim VAT paid in advance abroad.

Many business transactions conducted outside the UAE require VAT to be paid in advance in that other country. The Commercial Activities Certificate helps the parties involved recover that advance VAT payment.

Also check: VAT Refund Services

Benefits of Obtaining a Commercial Activities Certificate

The certificate’s benefits are aimed primarily at businesses involved in cross-border transactions. It helps holders take advantage of Double Taxation Avoidance Agreements, preventing repeated tax charges on the supply of the same goods and services. It also supports recovering advance VAT paid on international transactions in a country outside the UAE, even where a DTAA doesn’t apply.

Must check: VAT Registration Services

Procedure to Obtain a Commercial Activities Certificate

The procedure is relatively straightforward for a taxable person already registered with the FTA:

1. Log into the FTA portal (EmaraTax) and select the option to create a request for the Commercial Activities Certificate on the dashboard
2. Complete all required details in the application form and submit the applicable fee online
3. Once payment is processed, the Commercial Activities Certificate is issued and available for download
4. The certificate is password protected; the password is provided as instructed on the portal

Documents Needed to Apply

Only businesses already VAT-registered in the UAE can apply. The documents typically required include:

1. Tax Registration Number (TRN)
2. Trade license copy
3. A signed and stamped request letter from the applicant

Worked Example: Using a Commercial Activities Certificate to Reclaim VAT

A UAE-registered business attends a trade exhibition in a European country and pays local VAT of AED 18,000 (converted) on exhibition space, materials, and related services during the trip. Rather than simply absorbing this as an unrecoverable cost, the business applies for a Commercial Activities Certificate from the FTA, confirming its status as a genuine registered UAE business. Using this certificate alongside the original invoices and payment evidence from the exhibition, the business submits a refund claim to the relevant tax authority in that European country, following that country’s own refund process. Without the Commercial Activities Certificate confirming the business’s UAE registration status, many countries’ refund schemes simply won’t process the claim, the certificate is the credential that makes the underlying refund possible.

Common Mistakes When Applying

• Applying before VAT registration is complete. Only already VAT-registered businesses can apply for a Commercial Activities Certificate, attempting to apply beforehand simply won’t succeed.
• Mismatched details between the TRN and trade license. Inconsistencies between the documents submitted can delay processing or trigger a request for clarification.
• An unsigned or unstamped request letter. This is a simple, easily avoidable step that nonetheless causes real delays when missed.
• Assuming the certificate alone guarantees a refund. The certificate confirms UAE business status, it’s a necessary supporting document for a foreign refund claim, not a guarantee that the foreign authority will approve the claim itself.

Frequently Asked Questions (FAQs)

How Farahat & Co. Can Help

Farahat & Co., a trusted Tax Firm in UAE, assists VAT-registered businesses with Commercial Activities Certificate applications and cross-border VAT refund claims.

Contact Farahat & Co. today to discuss your Commercial Activities Certificate requirements.