VAT Refund Scheme for Foreign Business Visitors in UAE

The UAE’s Federal Tax Authority (FTA) announced the implementation of the VAT refunds scheme for business visitors on Tuesday. Those who are qualified for refunds can apply through a form available on the website.

The minimum VAT amount business visitor can reclaim is fixed at Dhs2,000, which may encompass a single purchase or multiple purchases.

The Authority behested potential applicants to keep the original tax invoices of the purchases for which they would like to reclaim VAT, as they will have to submit them along with their applications as an attestation.

Table of Contents

    • What is the business VAT refund scheme?
    • When FTA start receiving VAT refund applications?
    • Who is a foreign business visitor?
    • Who can claim a VAT refund as business visitors?
    • Who are not eligible to claim VAT refund as a business visitor?
  • VAT Refund Scheme for Foreign Business Visitors in UAE

What is the business VAT refund scheme?

Under the VAT Refund scheme for Business Visitor in UAE, if all the require condition met for a foreign business visitor then, He is allowed to claim VAT refund on expense occurred in UAE.

When FTA start receiving VAT refund applications?

UAE’s FTA already start receiving VAT refund applications from business visitors

The FTA said that it is now receiving applications to refund VAT incurred by business visitors to the UAE in 2018.

Khalid Ali Al Bustani, FTA Director General, said “The new clear and transparent procedure complements efforts to establish the UAE as a global hub for trade and creates an investment-friendly environment to support economic activities in the sectors where business visitors are active. This, in turn, reflects positively on various other sectors such as trade, exhibitions, and conferences, among others,”

He explained, “Reciprocity is a key condition for the procedure, whereby the authority will collaborate with countries that refund VAT for UAE businesses visiting their territories,”.

Who is a foreign business visitor?

Al Bustani further added, “The procedure abides by Federal Decree-Law No. (8) of 2017 on VAT and its Executive Regulations, which call for refunding taxes on supplies or imports made by a Person not residing in the UAE or any of the Implementing States, provided they meet the necessary conditions,”.

The time period for which refunds can be claimed is one calendar year like, at this time as on April 1, 2019, FTA is accepting refund applications for the calendar year 2018.

However, in subsequent calendar years, the opening date for refund applications submission will be March 1 of the following year which interprets that acceptance o the refund applications will be commenced on March 1, 2020, for the period from January 1 to December 31, 2019.

Who can claim a VAT refund as business visitors?

The scheme states the following conditions under which foreign businesses will be eligible to recover VAT incurred in the UAE :

  • Foreign businesses must not have any place of establishment / fixed establishment in the UAE or any of the GCC states that implement VAT
  • They must be registered as an establishment with recognized authority in the jurisdiction in which they are settled
  • They must not be registered or a tax chargeable person in the UAE
  • They must be from a VAT implementing country which equally provides VAT refunds for UAE companies under similar circumstances

The UAE’s Federal Tax Authority (FTA) also clarified that businesses established in any of other GCC states are still eligible to submit a VAT refund application.

Who are not eligible to claim VAT refund as a business visitor?

It outlined three circumstances under which VAT cannot be reclaimed –

The first is if the foreign business is involved in making supplies to the UAE (except that the recipient is certified to account for VAT under the reverse charge system).

Secondly, if the input tax in terms of any goods or services is non-recoverable as per VAT legislation. Hence, not recoverable by a taxpayer in the UAE.

The third is if the foreign business is a non-resident tour operator.

The UAE implemented 5 % VAT on the supply of most goods and services in the country on January 1, 2018.

VAT Refund Scheme for Foreign Business Visitors in UAE