Expediting your VAT refund claims

VAT refund is a crucial part of tax strategy but can be a long and difficult process. Businesses must know where they have the right to demand tax refunds and also how to get them swiftly. VAT refund problems could disturb a company’s financial management. The refund file submitted to the tax office must be complete, and all other procedures must be compiled correctly for a smooth and quick VAT refund.

It is often difficult for businesses to fulfill the requirements of the VAT recovery mechanism. Tax authorities apply strict criteria before authorizing repayment. Barriers include non-understanding of the tax rules, administrative procedures, insufficient or incorrect documentation, and missed deadlines for replies to the Federal Tax Authority (FTA). Unclaimed tax credits and missed or delayed refunds can cause negative cash flow and “tax leakage”, increasing costs and reducing profitability. Refund delays occur for various reasons- incorrect data, incorrect tax positions, claiming ineligible input tax credit, incorrect formats of tax invoices and credit notes,  supporting documents, discrepancies between books of accounts and VAT returns, etc.

Delays and how they can be prevented

FTA investigations which must be completed before refunds are released may cause delays. The FTA has 20 days from submission date for any enquiries before processing requests. It is likely to launch an enquiry if the repayment due is unusually high, or if it is the first VAT return for that business and shows a repayment due.

The VAT return must be correct and accurate. Errors stops the 20-day clock, with the FTA not proceeding until satisfied that the return is correct.

New businesses often claim a VAT refund because of set up costs such as property purchase on investment in fixtures, fittings, and equipment. The FTA looks closely at these and so can cause delays. Importantly, the FTA must have the business’s valid bank details for repayments.

Preparing for the VAT refund process

VAT refunds is a complex area in terms of the details and VAT-compliant support documents to be submitted. Ensuring 100% accuracy in the claim , providing  relevant documentation, and early submissions can prevent delays in repayment.

The following are some key steps which a company should follow for claiming VAT refund to avoid any probable penalty;

• Review of returns, refund workings and calculations, and supporting documentation
• Preparation of data templates and other documentation for VAT refund application
• Review of activities to identify any VAT non-compliance, or possible optimization
• Preparations and submission of the VAT refund application
• Receiving the VAT refund missing points report and queries from the FTA
• Re-submission of corrected copies and replies to the queries
• Managing all communication with the FTA
• Discussion with the authorities to finalize the VAT refund files

MBG’s team of highly experienced Tax Agents ensure clients pay the right VAT amount and get any applicable refunds due on time.

For more information and any Corporate Services requirements, please connect with us:

Email: [email protected] Call / WhatsApp:  +971 52 640 6240