Since the advent of Value Added Tax (VAT) within the UAE in January 2018, organizations and purchasers have needed to alter to the brand-new tax framework. For foreign organizations—people with no permanent presence within the UAE—understanding VAT may be challenging, in relation to claiming a refund for expenses during business activities within the UAE. This manual breaks down the VAT refund process for business visitors, outlining eligibility criteria, situations for claiming, vital documentation, and step-by-step commands to make sure you correctly navigate the application system.
Who Can Claim a VAT Refund?
To qualify for a VAT refund as an business visitor, specific conditions, need to be met, as set by means of the UAE’s Federal Tax Authority (FTA). The refund is to be given to foreign organizations that don’t have a hard and fast status quo within the UAE and aren’t accomplishing taxable activities within the UAE. Below are the important eligibility criteria:
- No Establishment within the UAE or Implementing State: The business needs to have no physical presence or constant status quo within the UAE or any nation that has applied a VAT regulation below the GCC agreements.
- Non-Taxable Status within the UAE: The entity must not be registered as a taxable individual within the UAE.
- Not Conducting Business within the UAE: The business need to now no longer be worried about ongoing or everyday business activities within the UAE.
- Registered as a Business: The foreign business needs to be formally registered with an able authority in its domestic
Who Cannot Claim a VAT Refund?
Not all foreign entities are eligible to assert a VAT refund within the UAE. The following classes are excluded:
- Foreign Government Entities: These aren’t eligible for VAT refunds.
- Non-Resident Tour Operators: These organizations are also ineligible.
- Businesses from Non-Reciprocal Countries: Entities from international locations that don’t provide reciprocal VAT refunds to UAE organizations aren’t eligible to assert refund.
Circumstances in Which You Can Claim a VAT Refund
To streamline the refund system, the FTA has mentioned that every declaration needs to cover a complete calendar year and needs to exceed a minimum claims quantity of AED 2,000. Only prices immediately associated with business activities are eligible for a refund. For example, VAT paid on business supplies, services, and hotels associated with business journeys can be recoverable, while VAT on non-recoverable prices together with leisure or personal-use automobiles is excluded.
Required Information and Documents
Before you start the VAT refund system, acquire the subsequent crucial files:
- Tax Compliance Certificate: A certificate from your house’s tax authority, attested via the means of the UAE Embassy, confirming your business’s reputation.
- Tax Invoices with Proof of Payment: Ensure all invoices are legitimate and encompass a Tax Registration Number (TRN) and evidence of fee. Invoices missing these statistics may be rejected.
- Authorized Signatory Documentation: A copy of the passport of the legal signatory, along with evidence of authority (e.g., a strength of attorney).
- Original Documents: Submit the unique invoices and fee evidence to the FTA. Scanned copies are proper; however, they need to encompass the vital evidence of fee and claim reference quantity within the electronic mail subject.
Step-by-Step Guide to Submitting a VAT Refund Claim
The system to assert VAT refunds is enormously sincere while you comply with those steps:
Create an e-Services Account
- Visit the FTA internet site and click on the ‘Sign Up’ button.
- Provide a running electronic mail address, create a password, and confirm your email.
- Click on the hyperlink dispatched for your electronic mail to finish your account verification within 24 hours.
Create a Taxable Person Account
- Once logged in, navigate to the Online User Dashboard and select ‘Add New Taxable Person.’
- Enter your business’s felony name (in each English and Arabic) and click on ‘Create Taxable Person.’
Access the refund form.
- After logging into your e-Services account, visit the VAT segment and click on ‘Business Visitor Refunds’ to get entry to the Refund Requests dashboard.
Complete the refund form.
- Fill out all obligatory fields marked with a crimson asterisk (*).
- Attach the specified files, together with certificates and invoices.
- Save your development frequently to keep away from statistics loss.
Submission Process and Timeline
- Review Information: Before finalizing the shape, double-take a look at all entries for accuracy.
- Submit: Click ‘Submit’ as soon as you are assured the shape is correct.
- Confirmation Email: You will receive an electronic mail together with your reference quantity as soon as your declaration is submitted.
Status Tracking and Response Times
- Draft: The claim is stored, however, now no longer submitted.
- Pending: The claim has been handed preliminary validation and is waiting for processing.
- Resubmit: Additional statistics or corrections are required.
- Approved: The claim is accepted, and a refund may be processed.
- Completed: The refund has been correctly paid.
- Rejected: The claim becomes rejected because of lacking or wrong statistics.
Important Deadlines
- Claim Period: VAT refunds must be requested for a full calendar year.
- Opening Date for Applications: Applications open on March 1st of the subsequent year.
- Submission Deadline: Submit claims via means of August 31st every year.
Special Conditions for GCC States
For organizations in different GCC states that don’t qualify as “Implementing States” under UAE VAT legislation, the requirement for a complete calendar year declaration does not apply. Check with the FTA for similar information on unique GCC country regulations.
Common Challenges and How to Overcome Them
Challenges
- Document Submission: Ensure all files are complete and successfully formatted before submission.
- Minimum Claim Amount: Remember that the claim needs to meet the AED 2,000 threshold.
- Resubmission Requests: Respond promptly to requests for additional information.
How to Overcome Challenges
- Double-Check Requirements: Thoroughly evaluate the document requirements before submission.
- Monitor Communications: Keep an eye fixed on your electronic mail for notifications from the FTA.
- Track Application Status: Use the e-Services portal to stay up to date on the status of your app.
Conclusion
Navigating the VAT refund process in the UAE as a business visitor may seem complex, but following the steps outlined in this guide will help simplify the process. Ensure you meet the eligibility criteria, submit the required documents, and adhere to deadlines to increase your chances of a successful claim. With careful attention to detail and the right support, you can efficiently claim a VAT refund for your business expenses in the UAE.
FAQs
Can I claim VAT on all expenses?
No, VAT on non-recoverable expenses such as entertainment or personal-use vehicles cannot be refunded.
What happens if my application is rejected?
If rejected, the FTA will outline the reasons. You will have the opportunity to resubmit the form with corrections.
How long does it take to receive a refund?
Refunds are generally processed within four months of submission. Once approved, the refund is issued within 10 business days.