October 8, 2019
UAE issues updated guidance on VAT refunds for business visitors
In September 2019, the United Arab Emirates (UAE) Federal Tax Authority (FTA) issued an updated guide on Value Added Tax (VAT) refunds for business visitors (the Guide). The Guide provides information on: (i) the eligibility of overseas businesses and business visitors to obtain refunds of VAT incurred in the UAE; (ii) the information required to be submitted with the claim; (iii) deadlines to submit the form; and (iv) a list of countries eligible for the scheme that operate reciprocal agreements. Businesses with no place of establishment in the UAE or another Gulf Cooperation Council (GCC) State and who are not registered for VAT in the UAE, should check their eligibility to recover input VAT incurred in the UAE.
In line with article 67 of the Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax (UAE VAT Regulations) relating to the implementation of a Business Refund Scheme, the FTA has issued updated guidance to provide additional information on the eligibility to apply for a refund, the required information to be submitted, deadlines, and a list of countries eligible for the refund based on existing reciprocal agreements.
Eligibility to apply for a VAT refund
Foreign businesses that meet all of the following conditions are eligible to apply for a VAT refund:
A VAT refund cannot be applied for if any of the following conditions are met:
Time period for claiming the refund
The period covered by a refund claim is 12-calendar months (except in the case of applicants resident in GCC States, which are not implementing States). The minimum amount of VAT to be claimed is AED2,000 (app. US$544).
Information required from the business to complete the refund application
Original hard copies of tax invoices, proof of payment as well as original hard copies of certificate of incorporation and the VAT registration certificate should be submitted. All submitted documents should be in Arabic or English.
Completing the refund form
The applicant is required to create a taxable person account on the FTA e-services portal and to complete the refund form available on the Business Visitor Refunds dashboard.
Once the refund form has been submitted, the applicant must post the form quoted with the reference number (which will be provided by the FTA) along with, the original hardcopies of the tax invoices, proof of payment, certificate of establishment, and tax registration certificate and to the FTA in a prepaid envelope with the name of the applicant mentioned on it. The applicant must submit the hard copies within one month of submitting the refund form online. The address of the FTA is:
Federal Tax Authority
The FTA will process the application within four months of receiving the hard copies of the required documents. If the claim is approved, the FTA will issue the refund within 10 business days and the refund will be in UAE Dirhams.
Time period for submitting the application
For claims in respect of the 2018 calendar year, the refund application may be made from 2 April 2019. The opening date for refund applications in subsequent calendar years will be 1 March. For example, for the period 1 January 2019 to 31 December 2019, applications will be accepted from 1 March 2020.
The FTA will only process refund applications up to six months from the date when the business can first make a claim (i.e., six months from 2 April 2019 for 2018 calendar year, six months from 1 March 2020 for the 2019 calendar year and respectively for all future years).
Please note that the calendar year condition (i.e., the period of the claim shall be one calendar year) does not apply in the case of applicants which are resident in any GCC State that is not considered to be an Implementing State.
List of counties eligible for the VAT refunds for business visitors treated as having reciprocal agreements
The approved list of countries with reciprocal arrangements includes: Austria, Bahrain, Belgium, Denmark, Finland, France, Germany, Iceland, Isle of Man, Kuwait, Lebanon,2 Luxembourg, Namibia,3 Netherlands, New Zealand, Norway, Oman, Qatar, Saudi Arabia, South Africa,4 Sweden, Switzerland, United Kingdom and Zimbabwe.
This pre-approved list is not necessarily exhaustive and other countries may inquire as to eligibility through their respective country Ministry of Finance.
1. An “implementing state” is another GCC State designated as such by the UAE. There are currently no other GCC States that are so designated.
2. In certain limited circumstances.
For additional information with respect to this Alert, please contact the following:
EY Consulting LLC, Dubai
Ernst & Young – Middle East (ADGM), Abu Dhabi
Ernst & Young LLP (United States), Middle East Tax Desk, New York