VAT Refund for Foreign Businesses and Tourists in UAE

Did you know you can get the VAT you paid on goods made in the UAE reimbursed? In short, when visiting the United Arab Emirates, you can legally shop tax-free. Consider making a luxury buy and getting cash back. Let us discuss in detail VAT Refund for foreign businesses and Tourist in UAE.

Foreign businesses that have incurred Value Added Tax (VAT) on purchases made in the United Arab Emirates (UAE) may be eligible for a VAT refund. Here are the steps to follow to claim a VAT refund:

1. Meet the eligibility criteria: To be eligible for a VAT refund, the foreign business must not have a place of establishment or a fixed establishment in the UAE and must not be registered or required to be registered for VAT in the UAE.

2. Keep the necessary documents: The foreign business must keep all original tax invoices and import/export documentation for goods and services purchased in the UAE.

3. Submit the refund application: The foreign business must submit a VAT refund application to the Federal Tax Authority (FTA) within the specified time frame, which is six months from the end of the calendar year in which the relevant expenses were incurred.

4. Verification and approval: The FTA will verify the refund application and may request additional documentation or information. If the application is approved, the FTA will issue a refund.

5. Receive the refund: The refund will be paid to the foreign business through a bank transfer to the designated bank account.

It's important to note that the VAT refund process can be complex and time-consuming, and it's always advisable to seek professional help from a tax agent or accountant who has expertise in VAT refund procedures in the UAE.

VAT Refund for Foreign Businesses in UAE

A foreign business is any company that has filed a registration form with the appropriate agency in the country where it is based. Suppose your company incurs considerable value-added tax (VAT) charges while conducting business in the United Arab Emirates (UAE). At that point, you can apply for a VAT refund if the correct filing procedure is followed.

Businesses Eligible for VAT Refunds should be

• Should not have a place of business or a fixed establishment in the United Arab Emirates or another State that has implemented VAT and should be registered as an establishment with the appropriate government in the jurisdiction in which it is established.
• Ideally, they shouldn't be taxable.
• It should come from a nation that reimburses UAE firms for VAT under identical conditions.

A refund is not available for those.

• The input tax incurred is not recoverable by VAT registration in the UAE (for example, entertainment expenditures).
• The firm makes supplies in the UAE (unless the recipient is required to account for the VAT owed);
• The company is not from one of the FTA's lists of qualified nations;
• The company runs tours for non-residents. 

How to apply for VAT Refund for Business in UAE

To initiate, you must file a VAT claim within a year if you want to do so in the UAE. Businesses based in other Gulf Cooperation Council (GCC) nations are the exceptions. Additionally, to qualify, VAT refund applications must be worth at least AED 2,000.

Required Documents

• Tax invoices that are appropriate and have a current tax registration number (TRN) as proof of payment. Please remember that to pay taxes, the UAE Embassy in the nation where your firm is registered must validate your TRN.
• A copy of a tax compliance document with your TRN is issued by the country where your company is headquartered. A certificate of business activity, business status, and other documents are acceptable submissions.
• A photocopied passport. The Federal Tax Authority of the United Arab Emirates classifies this as a "passport of an authorized signatory". Additionally, you must present evidence of your legitimacy as a signature.

You can do this electronically in the Emara Tax platform. You have to submit copies of the required documents to the Emara Platform.

VAT Refund for Tourists in UAE

The Tourists can reclaim VAT paid on their purchases when departing through Abu Dhabi International Airport. The UAE Federal Tax Authority announced it on November 18, 2018.

According to the present regulations, GCC nationals are eligible since Tax-Free Shopping is open to everyone who is not a resident of the UAE.

Purchasing items in the UAE for export (subject to limits and conditions) is tax-free shopping. Customers who authenticate their purchases under regional regulations may be eligible for a refund on certain goods.

Process of VAT Refund for Tourists

A tourist who wants to make a tax-free purchase must show a valid passport.

The shop employee uses the system to record tourist data.

The shop employee then adheres to the Tax-Free sticker on the sales receipt's back.

The visitor must authenticate the purchase at the airport when a Tax-Free digital form has been prepared.

Period for Refund

You have 90 days from the date of purchase to validate your tax-free sticker. For instance, a form that was issued on January 1 is valid through April 1. If you don't do this, the Tax-Free tag expires, and you can't claim the VAT anymore.

Collect your Refund

• The traveler brings the items and the receipt with them to the airport. The traveler visits a validation station. 
• After validation, the traveler selects a refund method. (Please note that the tourist may be subjected to a second validation check and may need to submit the goods for examination).
• Reimbursement Process- Cash (each tourist may receive a maximum cash refund of 10,000 AED. Over this sum, all additional payments must be made with a credit or debit card.

Conclusion

The essential information about getting a VAT refund in the UAE is summarized in this blog post, although the specifics will depend on your business.

By doing this, you can ensure you've complied with all the conditions for getting a VAT refund, including providing accurate and comprehensive documentation and immediately responding to any inquiries from the Federal Tax Authority.

FAQ'S

1. How much of my VAT refund will I receive in Dubai? 

You can receive 85% of the entire VAT amount paid in the UAE under the VAT refund program, less a 4.80 AED cost per Tax-Free Dubai Tag.

2. How long will it take to refund the process?

The FTA will attempt to issue the reimbursement within five business days after approving your claim. 

3. How should I register VAT?

The FTA website has the tax group registration form and the VAT registration form, respectively

4. Can I get my VAT back at the airport?

At the airport, seaport, or border port, there is a specific machine where travelers can pick up their reimbursements. The tax invoices for their purchases from the retailers participating in the program must be submitted.

5. How do I submit a claim for my UAE VAT refund?

• Access the FTA's e-Services website.
• Click Refund Request from the VAT Refunds tab to open the form.
• Fill out the form.
• The FTA will send you an email to let you know the outcome of your refund application when you submit the form.