The UAE has emerged as an established commercial hub, attracting businesses from all around the world. Ever since the country introduced VAT in 2018, foreign companies that incurred certain expenses in the UAE became eligible to claim VAT refunds.
However, the process of VAT refund filing is complex, and most companies need professional assistance from leading VAT consultants in Dubai to claim their refunds. Experienced consultants comprehensively help them understand the criteria, documentation, and submission requirements.
In this blog, foreign businesses operating in the UAE can have a detailed look at the VAT refund filing process in the UAE. With a professional approach, you can optimize the chances of a smooth and timely refund.
Criteria for Getting VAT Refund in the UAE
- In order to be eligible for a VAT refund in the UAE, foreign businesses need to meet specific criteria. Firstly, the business must not be registered for VAT in the UAE. This implies it should not have any business operations or a fixed establishment within the country.
- Secondly, the business must be registered in its home country with the relevant tax authorities.
- The entity must have incurred a minimum of AED 2,000 in input tax within the UAE.
- The VAT incurred should not be on expenses classified as irrecoverable, such as entertainment costs.
Required Documentation for Claiming VAT Refunds
A smooth VAT refund claim process requires accurate and complete documentation. The certificate of tax residency or a similar certificate is the most critical document that proves the status of the business in its home country. This document must include the tax registration number of the business and needs to be certified by the UAE Embassy in the country of origin.
Moreover, businesses must provide valid tax invoices from the suppliers in the UAE that include the TRN (Tax Registration Number) of the supplier. Each invoice has to be supported by a proof of payment like the receipt of a stamp from the supplier.
Other necessary documents include a copy of the passport of the individual authorized to make the claim, and a power of attorney proving their authorization, if applicable.
These documents should be submitted either in English or Arabic. Entities need to post all the documents to the FTA within one month of submitting the online application. Businesses must ensure that all these documents are accurate and complete in order to prevent delays or rejections during the refund process.
The VAT Refund Application Process
Businesses need to file for VAT refunds in the UAE online through the portal of the FTA.
- The process begins with the creation of an e-Services account. Next, you need to register the business as a taxable person on the website. Once registered, find the VAT refund form under the ‘Business Visitor Refunds’ section.
- When filling out the form, it’s imperative to enter all the necessary details accurately. This includes information about the applicant and the amount claimed.
- It is advisable for businesses to save the form periodically, so that they don’t lose their progress. Before submitting the form, make sure to thoroughly review the information entered and the attached documents to ensure accuracy.
- The FTA will send an acknowledgment email with a reference number once the submission is done.
- The original documents must be sent to the physical address of the FTA within a month, along with the printed form.
- Next, the FTA will review the application and inform the applicant about their decision within four months. In case any additional information is necessary, the applicant needs to update and resubmit the form through the portal.
Common Challenges and Tips for a Successful Claim
While the VAT refund process in the UAE looks straightforward, businesses often encounter various challenges. Some of the common issues include incomplete documentation, errors in the application form, or missing deadlines while submitting the document.
Businesses must consider working with an established tax consultant like the IMC Group to avoid these pitfalls. Professional tax advisors specialize in VAT refunds in the UAE. A knowledgeable consult ensures that all your documents are in proper order. They also take care that the application is completed correctly. In case there’s any issue, they address the same promptly.
Businesses filing for VAT returns should be aware of the deadlines to submit their applications. Claims for expenses incurred in the previous calendar year must be submitted between 1st March and 31st August of the current year. Missing out this window can result in the loss of the refund opportunity for that year.
