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A Comprehensive Guide to VAT Refunds

A Man's hand pointing out Value Added Tax (VAT) text in a notepad
The UAE implemented VAT in 2018 on the first of January. The FTA necessitates many segments to pay VAT at five percent or zero percent on services and goods supplied. Certain merchandises are exempt from VAT. Furthermore, some individuals pay VAT for items bought in the UAE but can get refunds via specific VAT refund plans. However, they can only do so if they meet certain conditions outlined by the federal government in VAT regulations. Let us focus on these VAT refund plans in this article. To know more about the latest information on VAT, get consultations from outstanding VAT services in UAE.

All You Need to Know About VAT Refunds for Tourists

Tourism is a significant industry in any nation. Tourism contributes significantly to the UAE's economy. Furthermore, the government doesn't want tourists to be hindered from shopping in the UAE by billing VAT on goods purchased in the country. As a result, the government in UAE has implemented a VAT refund plan for tourists. The scheme became effective in 2018 on the eighteenth of November.

This plan aims to promote tourism by refunding the VAT on goods and services purchased in the UAE. Tourists can decrease their expenses and, thus, overall costs by providing refunds. It applies to foreign tourists who are not citizens of any GCC VAT-implementing states. Furthermore, this scheme is unavailable to aircraft crew members departing the UAE.

To be able to qualify for the refund scheme, tourists must meet the following requirements:

  • The overseas traveler needs to be in the UAE at the time of purchasing the goods. They must buy the goods from retailers who participate in this scheme.
  • The tourist must display their intention to exit the country within ninety days.

Tourists who make purchases from registered retailers are eligible for VAT refunds. Tourists must disclose copies of tax invoices, credit cards, and passports on this system. Tourists can obtain cash or a transfer to bank accounts once their papers are satisfactory. If retailers are enrolled in this scheme, they must include the information in their returns. To gain refunds from VAT services, they must complete Form No. 201.

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An Overview of Refunding VAT Services Under UAE Business Sector

Foreign businesses created in jurisdictions other than the UAE conduct business in the UAE and can recoup the VAT paid. This is due to the UAE government's implementation of a business VAT refund plan for foreign firms but not for foreign government entities. Foreign businesses must meet the following requirements to be eligible for refunds under this scheme:

  • The business owner should not be a person paying taxes in the UAE.
  • They must not conduct business in the UAE.
  • They must not have a fixed establishment in the UAE or other VAT-collecting GCC states.
  • They must be enrolled with a relevant authority in another jurisdiction for business.

In addition, the following conditions must be met:

  • The input tax on services or goods must be reclaimable by a taxable person.
  • The company cannot be a non-resident travel agency.
  • The business must be located in a part of the world that is eligible to offer VAT refunds to businesses in the UAE.
  • The company should not make products in the UAE.

If the company meets the above criteria, it is qualified to seek VAT refunds. It must offer the following information to claim the refund:

  • Original tax compliance certificate, indicating the Tax Registration Number, issued by the jurisdiction. It must be acknowledged by the Embassy of UAE in the place where the tax is registered.
  • A copy of the passport
  • Proof of authority
  • Proof for VAT paid on expenses incurred in the UAE, along with VAT receipts and invoices
  • Indications from the tax authority of the value of reclaimable input tax on expenses incurred in the domestic jurisdiction if it is engaged in non-business activities.

Businessman working in accounting systems.

Using these documents and information, one can apply for VAT services and refunds on the e-services portal. However, you must set up a taxpayer account and keep a look on the dashboard for 'Business Visitors' Refunds.' After submitting the form online, you must prepare and send it to FTA in an envelope with an original photocopy of tax invoices, the reference number, the Tax Compliance Certificate, and proof of payments. You can also send an email with the necessary documents to the following mail address:

The foreign company must disclose the envelope within a month of completing the form online. This information and documentation must be in either English or Arabic. The FTA has a four-month processing period for the application. The refund will be issued in Dirhams if the claim is approved in under ten business days. Furthermore, a foreign company can get refunds only if the total amount is less than AED2,000.

VAT Services & Refunds for International Organizations, New Buildings & Foreign Governments

Refund VAT services aim to induce organizations and individuals to buy supplies from the UAE by recouping the VAT on their purchases. However, in order to be eligible for this scheme, they must meet the following requirements:

  • All purchases of services and goods must be for official purposes only.
  • The authority to which this organization belongs should have a similar scheme in place and should refund VAT to UAE entities.

Under this scheme, UAE nationals can receive VAT refunds on expenses incurred in building a new residence. However, in order to be eligible, they must meet the following requirements:

  • The expenses by which refunds in VAT are claimed must be for a newly built facility used solely by the applicant or their family.
  • Expenses must cover the purchase of construction materials utilized by builders in the construction of a housing complex or its site but do not include furniture or electrical appliances.
  • Expenses should cover services rendered by contractors, such as architects, builders, engineers, and others required for the efficient construction of a home.

Also Read:An Ultimate Guide to Types of VAT

The Bottomline

People may need clarification with numerous refund schemes while applying for refunds on VAT. Getting the paperwork, filling out forms, and determining eligibility are difficult tasks. However, you can decrease your VAT burden by contacting Fortius Consulting Services in UAE, which provides the best Consulting and CFO services. We can assist you in getting VAT refunds in the UAE with a team of VAT advisors and tax experts who can assist you in attaining full VAT compliance. Registration, return filing, deregistration, training, and accounting are also part of our VAT-related services.

Fortius Consulting Services is a trusted name for business consulting and CFO services in the UAE, Singapore and India. Through our expert consulting and advisory services,we assist organisations across the UAE & Asia to boost their profitability, improve operational effectiveness, increase management capability, institutionalise strategies, and upgrade their internal structures.


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