UAE VAT Refund For Foreign Businesses: Complete Guide

Value Added Tax is a relatively new addition to the UAE economic system. It is owing to the fact that VAT is imposed on January 1, 2018. Since then, several guidelines are released by the Federal Tax Authority to help the local and foreign business companies to comply with VAT registration. Recently, the FTA has issued a comprehensive guide for foreign businesses to apply for VAT refunds in UAE.

If you are running a multinational company having a presence in the UAE, the post is surely for you. The article is aimed at highlighting the major aspects of claiming a refund for VAT when it comes to foreign companies.

A comprehensive guide on VAT refund for foreign businesses in the UAE

The United Arab Emirates is considered a business-friendly country. It is because the state offers lucrative benefits and all essential assistance to establish and execute business without any difficulty. Keeping this in view, the latest guidelines are issued to help the international businesses claim VAT refunds.

Let’s consider a few essential aspects of the newly issued information for clarity of understanding and ease of claiming. Keep reading to get some knowledge nuggets:

Deadline for foreign business refund claims

Non-UAE established businesses can make a request for a refund to the Federal Tax Authority (FTA). The reclaim window is open for the calendar year 2019. The eligible business companies can check for their eligibility to apply for a VAT refund until 31st August 2020.

In case that you are unable to comprehend the eligibility criteria or any other requirements, get the best VAT consultancy to submit a claim as soon as possible. After all, professional assistance can help you go through the process without any difficulty.

Essential criteria for reclaiming VAT

Value Added Tax in the UAE requires companies to ensure effective compliance. However, many companies face confusion owing to the novelty of the system and business complexity. Keeping this in view, a list of requirements essential for VAT reclaim are given below:

  • No fixed establishment or place of establishment in the UAE
  • Not registered for VAT or no need to register as no taxable person involved
  • Not doing business with any company in the UAE or not carry on a local business
  • Doing the business with an overseas firm or carrying on an overseas business

The companies meeting the criteria for reclaiming VAT as a foreign business need to provide the original hard copies of all proofs for verification. Based on the provided evidence, the Federal Tax Authority will decide the VAT refunds.

Countries from which businesses are eligible

FTA has already issued the guidelines for business visitors from foreign countries to claim a refund for VAT. It is imperative to understand that not all countries are eligible but the business from the given below countries can submit a reclaim:

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

Now, you should check if your business is eligible to apply for a refund based on the mentioned countries. If you are established in one of the above countries, you must apply for getting a VAT refund in the UAE. You may also check for other guidelines to recover full or partial VAT depending on your situation.

Essential Conditions for Businesses not eligible

Foreign businesses need to ensure effective compliance with the UAE state laws for commercial dealings and taxation. The foreign businesses established in any of the above-mentioned countries having the following conditions are not eligible for getting a refund:

  • If you are running a foreign business but execute operations in the UAE or make supplies to the UAE
  • An input tax was earned on goods/services but it is not recoverable by the individual liable to tax. For instance, the entertainment or vehicles used in a personal capacity
  • A foreign business established in a country where no such jurisdiction of VAT refunds is available similar to the businesses operating the UAE.
  • Foreign businesses that are not listed as resident tour operators

VAT Refund Scenario for Multinational Companies

Many people confused foreign businesses with multinational companies. In fact, the multinational businesses having no outlet or presence in the UAE are eligible for a VAT refund.  In simple words, a business located in any country (from the given list) having global branches can avail the facility of VAT refund only if it has no establishment in the UAE and no supplies to the local market also.

In this way, a VAT refund is available to the multinational companies established in other countries with a reciprocal arrangement to get back VAT submitted in any form while business visits to the UAE.  The requirement to apply for a refund is twelve months.

Documents required for submitting a VAT refund request

The documents are required to verify the eligibility of foreign businesses. The detail is as given below:

  • Documents proving the establishment of the business as a foreign entity
  • Invoices containing sufficient information of VAT submitted in the UAE
  • Proof of tax registration in the fro of a certificate issued by the competent authority
  • Passport copy of the authorized signatory
  • Proof of authority submitted by the authorized signatory
  • Invoices of VAT in the form of hard copies
  • VAT refund application along with the above-mentioned documents
  • An original hard copy of the certificate of incorporate

Hire VAT experts for applying for the refund in UAE

It is imperative to note that the documents should be submitted in either Arabic or English because no other language is accepted for VAT refund processing in the UAE. As soon as the authority receives your documents, the processing will be started and you will get the confirmation of return or refusal within the direct time.

So, it is suggested to get the best VAT consultancy in Dubai for ensuring proper document management and submission. It will enhance the chances of a refund with effective VAT compliance. Contact us for more information!