VAT Refund for Business Visitors in the UAE

Foreign businesses can claim UAE VAT they paid under a special refund scheme

UAE tax law allows foreign businesses without a place of residence in the UAE to claim refund of the VAT they paid in the UAE in certain circumstances under the Business Visitors Refund Scheme.

Some key aspects of this special refund scheme are as follows:

Eligibility

Only foreign businesses who meet the following conditions are eligible to apply for a refund under this scheme. The minimum amount of VAT subject to refund under this scheme is  AED 2,000

• They have no place of establishment or fixed establishment in the UAE
• They are not a taxable person in the UAE
• They are not carrying on any business in the UAE
• They are carrying on a business and are registered as an establishment with a competent authority in the jurisdiction in which they are established.

Foreign government entities cannot use this option to claim VAT incurred in the UAE.

Similarly, a foreign business meeting the below criteria is also not eligible for VAT refund under this scheme:

• They make supplies in the UAE (unless the recipient is obliged to account for VAT under reverse charge mechanism)
• The input tax incurred is non-recoverable as per Article 53 of Cabinet Decision No. 52 of 2017 on Executive Regulation of the Federal Decree Law No. 8 of 2017 on Value Added Tax; for example, entertainment expenses, expenses related to motor vehicles available for personal use.
• The foreign business is engaged as a non-resident tour operator
• The foreign business is from a country that does not reciprocate a similar VAT refund mechanism to the UAE entities. In the event that a foreign business’s country is not listed in the Ministry of Finance (MOF) approved reciprocal country list, it should contact its country’s MOF which would then have to contact the UAE MOF for inclusion on the approved country list.

Timeline to submit the refund

For this special refund, the period of each refund claim shall be a calendar year.

Example: for the period 1 January 2021 – 31 December 2021, FTA will accept refund applications from 1 March 2022 and the last day for submission of refund claim shall be 31 August of each year.

Considering the above, foreign businesses who would like to claim refund using this special refund mechanism for the expenses related to 2021 calendar year shall be submitted before 31 August 2022.

Our remarks:

Submission of the refund claim under this special refund mechanism requires several administrative steps to be followed in the FTA e-service portal along with submission of supporting documents.

Upon submission of all relevant forms and documents, it will be processed within 4 months of submission by the FTA.

How We Can Help

The MBG team comprises tax and legal professionals who are highly experienced in interpreting statues and examining evidences and supporting documents.

We help foreign businesses eligible for VAT refund under this special scheme claim their refunds with timely support during the entire refund process.

To learn more about and discuss this tax alert in detail, please contact us.