UAE – As from 1 March 2022, FTA (Federal tax authority) will open VAT Refund application window for foreign businesses under the” Foreign Business Refund Scheme”to submit their value added tax (VAT) refund requests for the 2021 calendar year. The refund requests must be submitted by 31 August 2022.
Non-UAE resident businesses should consider whether they have incurred VAT in the UAE in calendar year 2021 and qualify for a refund.
Foreign businesses / business visitors should check if they are eligible to make a claim for refund of VAT paid on the goods purchased or services purchased in/ from UAE.
WHAT IS THE BUSINESS VAT REFUND SCHEME IN UAE ?
Under the business VAT refund scheme, foreign businesses are allowed to claim refund of VAT paid on expenses incurred in UAE, provided the required conditions are met.
WHAT IS A FOREIGN BUSINESS ?
A foreign business is any business that is registered with a competent authority in the jurisdiction where it is established.
WHO IS ELIGIBILE TO CLAIM VAT REFUND FOR FOREIGN BUSINESSES?
- They have no place of establishment or fixed establishment in the UAE or the Implementing State
- They are not a Taxable Person in the UAE (i.e., not registered or required to be registered for VAT purposes)
- They are not carrying on Business in the UAE E (unless the customer applies RCM)
- Must be carrying on a business and registered for VAT in a foreign jurisdiction (They are carrying on a Business and are registered as an establishment with a competent authority in the jurisdiction in which they are established
- Should be from a country which provides refund of VAT to UAE entities in the similar circumstances. It is essential that the foreign business should be from a country which provides refund of VAT to UAE entities in similar circumstances.
The minimum amount of VAT for which a claim may be submitted under this scheme shall be AED 2,000
WHO CAN NOT AVAIL VAT REFUND FOR BUSINESS VISITORS
- If the Foreign Business makes supplies in the UAE;
- Input Tax is not recoverable as per FTA laws (e.g. non-business expenses)
- Foreign business is from a jurisdiction which does not provide similar refunds (except for GCC registered businesses)
- Non-Resident Tour Operators
WHEN TO SUBMIT APPLICATION TO FTA ?
- The period of each Refund claim shall be for 12 calendar months (except in the case of applicant’s resident in GCC states which are not Implementing States)
HOW TO REFUND VAT FOR BUSINESS VISITORS IN UAE IN 6 STEPS ?
- Sign Up with FTA portal-eservices.tax.gov.ae
- Add company details in the registered mail id portal.
- Submit the refund form
- All documents required for refund as discussed above should be sent to The Federal Tax Authority the document should reach within one month from refund request submission.
- The refund form will be processed within 4 months by the FTA
- Once the request is approved, the refund is expected to issue within 10 working days.
DOCUMENTS REQUIRED TO SUBMIT FOR REFUND OF BUSINESS VISITORS IN UAE TO FTA
Below mentioned are the details required for submission of a refund request –
- Proof of incorporation in the respective country of establishment.
- Tax registration certificate of the respective country (if any).
- If you are undertaking exempt or non-business activities in your country of establishment, which do not give you the right to fully recover any input tax, you will need to provide a letter, or alternative evidence, from your Tax Administration which would indicate the level of input tax you are eligible to recover on expenses
- The relevant original tax invoices with proof of payment that you are claiming for refund
- Copy of passport of the Authorized Signatory
- Proof of Authority of the Authorized Signatory
- Bank Account details
The below-mentioned guidelines issued by the authority with regard to refund request submission are as mentioned below:
- All the documents are preferred to be in original hardcopy with proof of payment. No softcopies are entertained, which will lead to the rejection of refund request.
- As already discussed, the hard copies of invoices and other documents shall be sent to the Federal Tax Authority within one month of submission of the refund request along with the printed request form with the refund submitted reference number and a sufficiently pre-paid envelope having the name and details so as to return the documents after verification.
- The courier should be sent to- The Federal Tax Authority P.O. Box 2440 Dubai United Arab Emirates.
MANDATORY REQUIREMENTS IN THE TAX INVOICE
Following are the mandatory requirements in the Tax Invoice
Invoice number: Unique number for identification of each separate Tax Invoice;
Invoice date: Date of issuing the Tax Invoice;
Invoice item: Description of the supply;
Supplier’s name: Registered name of the supplier;
TRN: Tax registration number with the Federal Tax Authority;
COUNTRIES ELIGIBLE FOR VAT REFUND FOR BUSINESS VISITORS WITH RECEIPROCAL AGREEMENTS
Based on the circular issued by FTA in September 2019, following is the list of approved countries eligible for VAT refund for Business Visitors. In other words, if your company is located in one of the following countries, your company is eligible to apply for UAE VAT refund by fulfilling the other rules mentioned in the circular.
- Isle of Man
- Lebanon – in certain circumstances
- Namibia – please note that refunds are only available for business goods that are exported and not for services consumed in the UAE.
- New Zealand
- Saudi Arabia
- South Africa – please note that refunds are only available for expenses relating to goods that are exported from a designated UAE port within 90 days and does not apply to services.
In the case of a company that has the multiple numbers of branches, the Refund is only available to the branch(es) which is/are established in a country with a reciprocal arrangement in place. Refunds will only be paid to a bank account in the eligible country and the bank account must be in the name of the applicant / Foreign Business.
In the event that your country is not on the approved list, or does not have a VAT system, you should contact the Ministry of Finance of your country, which would have to contact the UAE Ministry of Finance for inclusion on the approved list.
Alia Noor (FCMA, CIMA, MBA, GCC VAT Comp Dip, Oxford fintech programme, COSO Framework)
Ahmad Alagbari Chartered Accountants