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VAT Refund in UAE: Guide for Foreign Businesses

The UAE Federal Tax Authority or the FTA has just issued a guide for VAT refunds in UAE, particularly for foreign businesses or foreign business visitors. According to the tax authority, its guide is intended in helping foreign businesses in checking as to whether they’re eligible in submitting claims for a VAT refund.

The guidance released just recently states that the foreign businesses that are eligible in applying for VAT refunds should meet all the conditions below:

  • They should have no fixed establishment in UAE or in any GCC state that’s implementing VAT;
  • They’re not taxable persons in the UAE;
  • They're not carrying out business in the country;
  • They're carrying on a business with registration with competent authorities in jurisdictions where they’re established

Generally, claims can be submitted starting from March 1 in the year that is after the calendar year wherein the VAT expense was incurred. The minimum amount of tax that may be processed for VAT refunds in UAE is Dhs2,000.

There are businesses or business visitors that are not eligible. If the following applies to you, then you won’t be able to make a claim for VAT refunds in UAE for foreign businesses:

  • If your foreign business is doing business or makes supplies in UAE
  • Input tax that was incurred on goods/services isn’t recoverable by taxable persons, as per the UAE legislation on VAT e.g. motor vehicles and entertainment that are for personal use
  • A foreign business that is from a jurisdiction that doesn’t have similar circumstances on the provision of VAT refunds for business entities in UAE;
  • Foreign businesses that are not resident tour operators

Are multinational businesses able to claim under VAT refunds for foreign businesses?

For businesses that have different branches situated across the globe, refunds are only available to branches that are established in countries with reciprocal arrangements in place for VAT refunds. A refund will only be given to the bank account of an entity that is in a country that is eligible. The bank account has to have the name of an applicant or foreign business.

Take note: it’s required that the period for each claim for VAT refund is twelve calendar months except for the case of an applicant that is a resident in a GCC state that is not an implementing state.

 What are the requirements for VAT refunds for foreign businesses?

  • Proof of incorporation from the business’ country of establishment
  • Relevant VAT invoices that provide sufficient proof of payment for a VAT refund claims
  • Tax registration certificate issued by a competent tax registration
  • Authorized signatory’s passport copy
  • Authorized signatory’s proof of authority
  • VAT invoices original hard copy sent along with VAT refund application
  • Certificate of incorporate original hard copy, together with a tax registration certificate

All documents that are required have to be submitted in English or Arabic. If any of the documents that are received are in other languages apart from English or Arabic, then the application for a VAT refund under the scheme won’t be processed.

As soon as the information is received by the UAE FTA in hard copy, a refund form is going to be processed in four months from the submission. A claimant will receive email notifications from UAE tax authority on the result of the application. If the claim for the VAT refund is approved, then the FTA is going to issue a refund in ten working days from the date of the approval. Take note: refunds are paid in AED or UAE dirhams.

Read more: VAT in UAE: Tourists Can Now Process VAT Refunds in shopping Malls, Hotels

When is best to send an application for VAT refunds?

The period for every refund claim has to be one calendar year, as mentioned earlier. For instance, 1st of January 2018 to the 31st of December 2018. For the period of the 1st of January 2019 to the 31st of December 2019, the applications are going to be accepted starting on the 1st of March 2020.

What countries are eligible for VAT refunds for foreign business visitors in UAE?

The approved countries that have reciprocal arrangements are the following:

Austria, Bahrain, Belgium, Denmark, Finland, France, Kuwait, Iceland, Isle of man, Lebanon, Luxembourg, Namibia, Netherlands, New Zealand, Norway, Oman, Qatar, Saudi Arabia, South Africa, Sweden, UK, and Zimbabwe.

If your country isn’t in the list of approved jurisdictions or it doesn’t have any VAT system, then contact the department or ministry of finance that's from your country. Your country’s ministry of finance will be the one to contact the Ministry of Finance of UAE to include your country on the list.

Here at Farahat & Co, our team of VAT refund specialists helps clients with their applications. Our team is comprised of experienced and seasoned VAT experts and financial advisors that keep track of procedures and attitudes that are adopted by tax authorities. Contact us today if you want the help of regulated tax agents in UAE.

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.