VAT refund for official participants of Dubai EXPO 2020

Intro

It’s Just 20 days to go for greatest event on the earth, which welcomes all participants from the globe, dedicated to finding solutions to fundamental challenges facing humanity by offering a journey inside a chosen theme called “Connecting minds and Creating future” through engaging and immersive activities. Organized and facilitated by governments and bringing together countries and international organizations (Official Participants), this major public event is unrivalled in their ability to gather millions of visitors, create new dynamics and catalyze change in the host country (United Arab Emirates).

General Rule

Typically, a person may recover VAT incurred in the UAE on Goods and Services where the Goods and Services are used or intended to be used for making taxable supplies. Where incurred expenses, which are not relate to any taxable supplies made by the person, VAT would not be recoverable. As we all know official participants of EXPO 2020, would not involve in any commercial activity (i.e taxable supplies), accordingly there could be chances that official participants are ineligible to claim the tax paid on goods and services, which they have incurred for constructing and operating their own pavilions. The VAT paid for construction and operating of pavilions would be significant as construction works involves high costs.

Benefits provided in SEE agreement for official participants

However, In line with the SEE Agreement (Between United Arab Emirates and the Bureau International Des Expositions), Article 10, and the Cabinet Decisions No.1 of 2019 on the ‘Refund of Value Added Tax Paid on Goods and Services Connected with Dubai Expo 2020’, all provided services from non-commercial activities and operations made for the purpose of Expo 2020 Dubai by the Official Participant or the Office of the Commissioner General of Section, whether provided within the boundaries of Expo 2020 site or outside the site shall be subject to a VAT refund.

Let’s see, which kind of VAT, an official participants of Dubai EXPO 2020 may reclaim. (5 categories)

1. VAT incurred by the Official Participant on Goods and Services in direct connection with the construction, installation, alteration, decoration and dismantlement of their exhibition space;
2. VAT incurred by the Official Participant on Goods and Services in direct connection with the works and activities of organizing and operating the Official Participant’s exhibition space and any presentations and events within the Expo 2020 site
3. VAT incurred by the Official Participant on Goods and Services relating to the actual operations of the Official Participant, provided that the value of each Good or Service for which the Office of the Official Participant makes a claim is not less than AED 200;
4. VAT incurred by the Official Participant in connection with all operations, services and activities provided for the purpose of participation in Expo 2020 Dubai, whether located within or outside the boundaries of the Expo 2020 Dubai site; and
5. VAT incurred on import of Goods for personal use of the Official Participant’s Section Commissioner-General, Section Staff and the Beneficiaries.

In addition, in order to claim the VAT paid on the purchases which have been outlined in category 1 & 2, official participant require to get certificate of entitlement from Bureau.

How Official Participants can apply for the refund?

Refund request process will differ from registered official participant and unregistered official participants, Official Participant must register for VAT if the value of their taxable supplies or imports (for commercial or non-official purposes) in the UAE exceeds, or is anticipated to exceed, the registration threshold of AED 187,500 (Equivalent to USD 50,000) .

1. Official Participants not registered for VAT (Phase I)

Where Official Participant is not registered for VAT, it can apply for a VAT refund in respect of Goods and Services mentioned above by using a special refund application process. The application shall be made to the Bureau by the Official Participant on a periodic basis as outlined below and, The Bureau will take 20 business days to review the application if approved, the VAT will be refunded directly by the FTA into the nominated bank account within 30 business days of the approval of the application. If an Official Participant has omitted any qualifying expenses from a refund application, these expenses may be included in a subsequent application.

Frequency of application in case of phase I:

1. Within 15 days of the end of the calendar month in which the total VAT value to be claimed is AED 10,000 or more.
2. Within 15 days of the end of the calendar quarter where the total VAT value to be claimed is less than AED 10,000.

2. Official Participants registered for VAT (Phase II)

Where the Official Participant is registered for VAT in the UAE, it would be required to file regular VAT returns. Such VAT returns will contain information regarding supplies and imports made by the Official Participant for which VAT is payable, as well as of any expenses in respect of which the Official Participant seeks to recover VAT incurred. Where registered official participant seeks to claim the VAT relation to above mentioned non-commercial activities, they should include this details in Box No. 10 of VAT return. FTA normally take 20 business days to process the refund request. If approved FTA will refund within 5 business days in the nominated bank account.

Payment of Tax

Before the sale of the Goods, the Official Participant must request for approval of the sale by submitting the “Consent of Sale Request Form” to the Bureau. The form shall be submitted electronically. Once the Official Participant has received the approval on the sale notification from the Bureau, it may proceed with the sale of the Goods.

Following the completion of the sale, the Official Participant should account to the FTA for the amount equal to 1/21 of the sale price of the goods.

De – Registration

During the decommissioning period of Dubai Expo 2020, all Official Participants will be required to clear and close their VAT accounts. Official Participants registered with the FTA must submit a de-registration request through the FTA’s e-services portal. Official Participants not registered with the FTA must submit a request to close the VAT account to the Bureau. Official Participants must ensure that any VAT payments are cleared before submitting a de-registration or account close request.

How MBG Can Help

MBG Corporate Services can help you

1. Registration with FTA authorities
2. Assist in Phase I refund application process
3. Assist in Phase II refund application process
4. VAT Compliance review Services
5. VAT health check services
6. Getting the Certificate of refund entitlement from Bureau
7. UAE VAT knowledge partner for pavilion.
8. Assist for filing of Consent of Sale Request Form to the Bureau
9. Assistance in filing of Deregistration application with FTA/ Bureau

Our Core Principles:

MBG Corporate Services is focused on five unique principles;

International focus – Cross-border VAT issues are our core competency and each of our consultants has international experience.

Multi-Cultural staff – We have the necessary capabilities to deal with all VAT offices across GCC. Our staffs has gained vast cross cultural experience by virtue of working with Japanese, Chinese, Russian, Arabic & European business verticals in Middle East Region.

Centralization of Expertise – Centralization allows us to gain efficiencies of scale and apply tight quality controls much more easily. However, we do not believe in a “one size fits all” approach to VAT procedures – we remain focused on the peculiarities of each business. While providing any advisory, we believe in 6 eyes policy review so that every work should be double check.

Practical Approach– We believe in giving advice that provides practical solutions to our clients’ problems.

Seamless integration with our other service lines – Our consultancy capabilities seamlessly complements our other service offerings which as a total solution provide greater all round benefits to our clients.  The closeness to the heart of your business through these other services, help our consultants offer you more practical and focused assistance