UAE VAT Refund: A Handy Guide for Businesses

Tax is a modest, nondescript word that has the power to strike fear into the hearts of many who hear it, or at the very least a groan, and for a good reason. If you are unfamiliar with the laws or are not skilled at financial bookkeeping, it can be difficult to determine what you need to file on your tax returns.

As a business owner, the stakes are even higher because your tax calculation has a much larger impact on the future of your company. As a result, it is strongly advised that you hire an auditing firm to ensure that your company remains tax compliant. Furthermore, an auditor can help you identify tax deductions that you may be missing.

In terms of deductibles, if your business spends a significant amount of money on business travel in the United Arab Emirates (UAE), and some of those expenses include value added tax (VAT), you may be eligible for a VAT refund if the proper filing procedure is followed.

What is VAT, and Which Businesses are Eligible for a VAT Refund in the UAE?

VAT (also known as GST or goods and services tax) is a consumption tax levied on goods and services in most countries worldwide, including the UAE. It is calculated as a percentage of the retail sale price of a product or service.

Under the UAE's national tax systems, most non-resident business entities are eligible for a VAT refund on expenses with a couple of exceptions,most notably: only foreign businesses from countries that allow VAT refunds to the UAE are qualified. Of course, rebates are subject to additional terms and conditions imposed by the Federal Tax Authority (FTA).

It should be noted, however, that refunds on VAT payments are limited to a certain percentage. This is where things can get complicated, so you should consult an auditing firm in Dubai with VAT professionals before submitting your claim.

Business Expenses in the UAE That Qualify for VAT Refunds

Foreign business owners in the UAE are entitled to claim VAT on goods and services used for both business and personal purposes, but there is more to it than that.

For example, there are exceptions in place for services and products that are primarily for personal use, even if they are expensed by businesses, such as new stationery or a computer.Exemptions are also in place where VAT-expensed business purchases are used to create VAT-exempt products and services, as well as for business entertainment costs.

Then there are separate rules for goods purchased secondhand. However, eligible businesses can generally receive a refund for the following business expenses:

• Meals and accommodation
• Fuel and car rental

How to Request a VAT Refund in the UAE

To begin, if you intendto file a VAT claim in the UAE, you must do so within a year (12 calendar months). The only exceptions are for businesses based in other Gulf Cooperation Council (GCC) countries. In addition, VAT refund claims must be worth at least AED 2,000 to be eligible.

Now that this is out of the way, here is a list of some of the documents that you will need to file a claim:

• Proof of payment and applicable tax invoices with a valid tax registration number (TRN). Please keep in mind that your TRN must be validated by the UAE Embassy in the country where your business is registered to pay tax.
• A copy of a document demonstrating your tax compliance and displaying your TRN as issued by the tax administration body in the country where your business is located. Acceptable submissions include a certificate of business activities, a certificate of business status, and other documents.
• A copy of your passport. This is listed as "passport of an authorized signatory" by the UAE's Federal Tax Authority. You would also need to provide proof of your authority as a signatory.

Other documents may or may not be required, depending on the type of business you conduct in the UAE and your home country.The good news is that you can send your documents and file your claim with the Federal Tax Authority electronically. This means you won't have to send in physical copies of invoices or other documents.

Ask for Help When You Need It

This blog post provides an overview of what you need to know about obtaining a VAT refund in the UAE, but the finer details will be unique to your company. As a result, before you begin the application process, you should consult with an FTA registered tax agency.

This way, you can ensure that you have met all of the requirements for receiving a VAT refund, such as submitting proper and complete documentation and responding to any queries from the Federal Tax Authority promptly.

Get in touch with MBG Corporate Services today.