VAT Refund for Foreign Businesses in the UAE

The Federal Tax Authority (FTA) has introduced a VAT refund scheme in the United Arab Emirates for foreign businesses. With this scheme, all eligible non-United Arab Emirates established businesses will be able to submit the VAT refund requests for the calendar year 2019. However, the refund application needs to be made by 31^st August 2020.

Which businesses can claim VAT refund?

Only specific foreign businesses will be eligible for the VAT refund paid on expenses incurred in the UAE. The eligibility criteria are as follows:

• The business must not have a place of establishment or fixed establishment in the UAE or other GCC implementing state.
• They are not a taxable person in the UAE (meaning they are neither registered nor required to be registered for VAT purposes).
• They are not carrying on a regular business or ongoing activities of a business in the UAE; and
• They must be carrying on a business and are registered as an establishment for VAT overseas.

Other conditions

FTA has further mentioned the minimum claim amount for each VAT refund application which is AED 2,000. This may include a single purchase or multiple purchases. Businesses aiming to claim refund must hold the original tax invoices / receipts of the purchases they would like to reclaim VAT. The same has to be submitted along with the refund application to the FTA

Further, businesses operating out of selected countries are only entitled to a VAT refund scheme. Below is the list of eligible counties:

• Austria
• Bahrain
• Belgium
• Denmark
• Finland
• France
• Kuwait
• Iceland
• Isle of Man
• Lebanon (in certain situations)
• Luxembourg
• Namibia (in certain situations)
• Netherlands
• New Zealand
• Norway
• Oman
• Qatar
• Saudi Arabia
• South Africa (in certain situations)
• Sweden
• UK
• Zimbabwe
• Switzerland

If you have incurred VAT in the UAE but your business is not established in the above mentioned countries, you might not be able to recover the VAT under this scheme. However, you can seek help from professional consultants to explore other options to reduce your VAT cost in the future.

IMC Group is a renowned VAT consultant in the UAE. Our VAT experts can assist you through the entire process of applying for a VAT refund and also help you minimise your VAT cost in the future by reviewing your supply chain structure. For more information, you can get in touch with us.