How Do UAE VAT-Registered Businesses Claim a VAT Refund Through EmaraTax?

When a VAT Refund Arises for a Registered Business

A VAT refund position arises when a VAT-registered business’s recoverable input tax for a tax period exceeds its output tax liability for the same period. This produces a net VAT credit rather than a net VAT payable amount. The credit position can arise for several legitimate business reasons:

• Zero-rated exports: a business that primarily exports goods or services charges 0% output VAT on those supplies while retaining the right to recover input VAT on its costs. The result is a persistent input tax credit that accumulates with each return period
• Significant capital expenditure: a business that makes large purchases of assets or construction services in a period incurs substantial input VAT that may exceed the output VAT on its sales in that period
• Business startup: a newly registered business may have significant setup costs and input VAT before its revenue ramps up, producing an early credit position
• Seasonal trading patterns: a business with concentrated capital spending in one period and revenue in later periods may periodically generate credit positions

Where a net VAT credit exists, the business has two options: carry the credit forward and offset it against future VAT liabilities, or submit a VAT refund application to the FTA to recover the credit in cash.

Also Check: VAT Consultancy Services

The 5-Year Limit to Claim Recoverable Input Tax

A significant development introduced by Federal Decree-Law No. 16 of 2025 (effective 1 January 2026) is the imposition of a maximum 5-year limit on the right to claim recoverable input tax. A business that has accumulated input tax credit but has not claimed a refund within 5 years of the relevant tax period loses the right to recover that input tax. This change means businesses with persistent credit positions , particularly those making predominantly zero-rated supplies , must actively manage their refund position and submit applications within the 5-year window rather than indefinitely deferring recovery.

Under Cabinet Decision No. 17 of 2026 (effective 1 April 2026), where a VAT refund request is pending with the FTA, the business’s VAT records for the relevant period must be retained for an additional 2 years beyond the standard 5-year retention period, to support the FTA’s review of the outstanding claim.

Carrying Forward vs Claiming a Refund

Carrying forward the credit is the simpler option and requires no action beyond filing the VAT return. The credit balance is shown on the EmaraTax account and automatically offsets against the next VAT liability. This is the most practical approach where the credit is small and is expected to be absorbed against a future output tax liability within the next one or two periods.

Submitting a refund application is appropriate where the credit is material and is unlikely to be absorbed quickly through normal trading activity , for example, where the business is primarily zero-rated and generates a consistent credit with each return cycle. Given the 5-year claim window introduced by FDL No. 16 of 2025, businesses in persistent credit positions should review their refund position periodically rather than allowing credits to accumulate unclaimed.

How to Submit a VAT Refund Application Through EmaraTax

All VAT refund applications are submitted through the FTA’s EmaraTax portal at eservices.tax.gov.ae. The process is as follows:

Step 1: Log in to EmaraTax

Navigate to eservices.tax.gov.ae and log in using UAE Pass or EmaraTax account credentials. Select the taxable person profile for the VAT-registered entity.

Step 2: Access the VAT Refund Section

From the VAT dashboard, select the VAT Refund option. The portal displays the current credit balance available for refund as calculated from the most recent VAT return filed. Confirm that the credit balance shown matches the expected refund amount before proceeding.

Step 3: Complete the Refund Request Form

Enter the refund amount being requested. The amount cannot exceed the available credit balance shown in the account. Provide the bank account details to which the refund should be transferred , the account must be held at a UAE-licensed bank and must be registered in the name of the legal entity making the claim. Confirm that all VAT returns for all tax periods are filed and up to date; the FTA will not process a refund application where outstanding returns exist.

Step 4: Submit the Application

Review all information for accuracy and submit the refund application through EmaraTax. A submission confirmation reference number is issued immediately. The status of the application is updated in the EmaraTax account and communicated by email as the FTA’s review progresses.

Step 5: FTA Review and Outcome

The FTA reviews the submitted refund application within 20 working days of receipt. The FTA may accept the application and process the refund, request additional information or supporting documentation, or reject the application with reasons. In exceptional cases, the FTA may extend the review period beyond 20 working days and will notify the applicant accordingly. Once the application is approved, the refund amount is transferred to the registered bank account within 5 working days of the approval decision.

Why a VAT Refund Application May Be Rejected or Delayed

VAT refund applications are subject to FTA verification. Common reasons for rejection or delay include:

• Outstanding VAT returns: any unfiled return for any period suspends the refund until all returns are filed
• Revenue reconciliation discrepancy: where the VAT-reported revenue does not reconcile to the financial statements for the same period, the FTA may place the application on hold pending clarification
• Input tax claimed on invalid invoices: where the input tax credit is supported by invoices that do not meet the mandatory field requirements under UAE VAT law, the FTA may disallow part of the claimed credit
• FTA offsetting against outstanding liabilities: the FTA has the right to offset a refund amount against any outstanding VAT, penalties, or other tax liabilities before transferring the balance to the business. Where the outstanding liability equals or exceeds the refund amount, no cash transfer may result
• Audit trigger: a large or unusual refund claim may trigger an FTA audit of the VAT returns for the relevant periods before the refund is released

Maintaining Supporting Documentation for Refund Claims

The FTA may request supporting documentation for any refund claim at any stage of the review. Businesses should maintain complete records for the periods covered by the refund claim, including all tax invoices supporting input VAT claims, export documentation where zero-rated supplies are the reason for the credit, and bank statements confirming payments made. As noted above, under Cabinet Decision No. 17 of 2026, where a refund application is pending, records must be retained for the standard 5-year period plus an additional 2 years.

Frequently Asked Questions (FAQs)

How Farahat & Co. Can Help

Farahat & Co. assists UAE businesses with VAT refund applications through EmaraTax, including credit position reviews, supporting documentation preparation, reconciliation of VAT returns to financial statements, and FTA correspondence throughout the review process. As an FTA-registered Tax Agent, our team can submit and manage refund applications directly on behalf of clients.

Contact Farahat & Co. today to discuss your UAE VAT refund requirements.