VAT refund in Emirates : foreign business visitors in the UAE
Implemented since 2018, the VAT is charged in the United Arabs Emirates with the rate of 5% on most locally provided goods and services.
VAT recovery solutions are offered by the Federal Tax Authority of Emirates both for businesses and for tourists from foreign countries.
There are different mechanisms of business VAT Recovery in Emirates:
1. Locally registered companies can operate a VAT deduction in their periodical VAT returns.
2. Foreign companies registered outside the UAE can request the refund of VAT on their travel expenses and purchases through the special business visitors scheme.
Business visitors VAT refund scheme in the United Arabs Emirates
Foreign businesses, except non-resident tour operators, are eligible for the special VAT refund scheme under certain conditions:
- Absence of VAT taxable supplies in the UAE (unless reverse-charged by local buyer)
- Absence of fixed establishment or business residence in the UAE
- VAT refund reciprocity between the country of establishment and the UAE
- Allocation of VAT charged expenses to company’s business operations
VAT recovery rules in the United Arabs Emirates
VAT deductibility: The VAT is not deductible in Emirates on entertainment expenses and on motors vehicles available for private use.
VAT refund period: The VAT can be claimed back in Emirates for the annual period of 12 months. Only one file per expense year is accepted by the Federal Tax Authority.
Minimum VAT claim amount: The minimum amount of the annual VAT reclaim must be greater than or equal to AED 2.000.
VAT reclaim deadline: The VAT reclaim can be done between March 1st and August 31st of the year following the expense year.
VAT refund timeline: The Federal Tax Authority of Emirates is processing the VAT refund applications within 4 months after their reception. If the additional information is requested by the FTA , the applicant must resubmit the application. The time process will be then reset for 4 months. The VAT refunds are paid out in local currency, United Arab Emirates dirhams, within 10 days after the notification of the decision.
VAT refund application in the United Arabs Emirates
The VAT refund application in Emirates includes several steps:
1. Creation of the foreign business visitor’s profile on the electronic tax portal
2. Submission of the electronic VAT refund application
3. Postal shipment of original Tax invoices and Tax certificate
The FTA requires the provision of multiple documents along with the VAT refund application.
There are special formal requirements both to VAT invoices and to accompanying documents.
The appointment of the local tax representative is not mandatory in Emirates for the VAT recovery purposes though the special business visitors scheme.
Opportunities
BtoBnice accompanies businesses in their VAT recovery in Emirates.
We take care of all the steps of your VAT refund application:
- Checking your VAT refund eligibility
- Selecting eligible invoices
- Collecting, preparing and finalising required documents
- Creating, filing and following up on your VAT refund application
- Supporting your business in any exchanges with the FTA
- Monitoring the receipt of your VAT refunds
For more information, we invite you to contact our VAT expert: contact@btobnice.com
