Are you looking for how to claim VAT refund in Dubai and across the UAE?
In this post, you will get all information about how to get VAT refund, who can claim for refund and process to claim VAT refund.
It is necessary for all the registered business to file a VAT return providing the details of sales, buy input and output VAT paid during the time of tax. The money collected on sales is output VAT and the money awarded to the supplier to expenses/purchases is Input VAT.
The qualified input VAT amount can be balanced with the output VAT amount. Following is the situation that will result in after balancing the input VAT and output VAT:
VAT Payable: If the input VAT is lesser than the output VAT amount, then the remaining balance is termed VAT payable and required to be paid to the FTA.
VAT Refundable: If input VAT amount is higher than the output VAT then the extra amount will be VAT refundable.
On new years eve 2018, UAE/Dubai, member of the GCC council, took a great leap and introduced the Value Added Tax(VAT). Prompted by the constant fall in oil prices over the last three years, the new VAT tax aims to generate additional revenues that would contribute 1-2 % of total GDP.
Table of Contents
- Vat Refund Summary User Guide
- How to use VAT Refundable according to UAE VAT?
- How To Get VAT Refund In UAE
- How to demand VAT Refund UAE?
- Given below are the steps to submit VAT refund form ‘VAT311’:
- VAT Tax Refund Conditions for Standard Products and Services
- Products and Services not eligible for TAX Refunds
- VAT UAE Tax Refund Conditions For Tourist
Vat Refund Summary User Guide
There are also fears that this could give rise to inflation. However, experts believe it to be a one-off thing. A large number of products having been included in the zero rate or exempted category would negate this momentary inflation.
How to use VAT Refundable according to UAE VAT?
Given below are the two options about how the taxpayer must use the excess input VAT which is commonly known as VAT refundable:
- For a VAT refund, only the taxpayer will be qualified
- If he does not want to request for a refund of the excess input VAT, then the excess recoverable tax will be carried forward to subsequent tax periods and can be used to offset against the payable tax and/or penalties, or he can apply for a refund later.
How To Get VAT Refund In UAE
UAE is new to taxation. There is some apprehension about the new TAX regime. However, on the backdrop of falling oil prices, it seems the right step ahead for GCC countries to expand revenue resources. In VAT regime business owners/firms share the responsibility of tax collection and accounting.
As UAE is now not a VAT free country, So It’s Important to know about VAT Return and how everyone can file it.
Accordingly, business firms in UAE are all prepared to comply with the new rules. The process for registration, returns and payments have been up and running. Besides another important aspect that needs to be addressed is the VAT TAX refund Dubai process.
Now let’s try to understand the various scenarios in which vat refund is applicable to the newly introduced VAT tax in UAE/Dubai.
How to demand VAT Refund UAE?
If you have excess input VAT, then to request a refund, an option is present on the VAT return and the steps are given below:
- Select ‘Yes’ from box no. 15 ‘Do you wish to request a refund for the above amount of excess recoverable tax’
- If you select ‘No’ then your excess recoverable tax will be moved forward to upcoming Tax Periods and can be utilized to offset against payable tax and/or penalties
- Submit the VAT Return and after submitting you must complete the VAT refund application ‘Form VAT311’.
Given below are the steps to submit VAT refund form ‘VAT311’:
1. Using username and password, login to FTA e-Services Portal
2. Select the ‘VAT’ tab and then the ‘VAT Refunds’ tab to access the refund form
3. As shown in image, click ‘VAT Refund Request’
4. After clicking ‘VAT Refund Request’ the refund form will open. Fill up the details in all the given fields. Mandatory fields are compulsory to fill in order to submit the Refund Form. Most of the details are auto-filled. Given below are the fields present in the VAT refund form 311:
a. TRN, Legal name of entity (English) etc.: Based on the information present in the account user profile, this section is auto-filled. So, it is important that the information present in your profile must be correct therefore check the details before completing the refund form
b. Total amount of Excess Refundable TAX (AED): this field is auto-filled concerned on the excess refundable tax reported in the last VAT returns minus administration penalties due.
c. The amount you wish to have a refund (AED): The amount you want to refund must be mentioned here. The amount you enter must be less or equal than the ‘Total amount of Excess Refundable Tax’
d. The remaining amount of eligible Excess Refundable Tax: This field is auto-filled and shows the leftover amount of excess recoverable tax which can be applied in the future
e. Late registration penalty amount (in AED): Based on whether you have a penalty charge and have a late registration penalty for VAT or not, the field is auto-filled. Given below is the table that gives the details of the amount that will be shown in this field:
|If you have not been charged a penalty||Zero|
|If a penalty is charged and you have paid the penalty||Zero|
|If a penalty is charged but is yet to be paid at the time of claiming this refund||20,000|
f. Authorized Signatory and Declaration: Authorized signatory will be auto-filled and before submitting tick the declaration.
5. After completing the form, click on the ‘Submit’ button as shown below:
As per the FTA, the refund form will be processed. From the FTA, you will receive an email notification based on the result of the application. The amount will be repaid, once your claim is accepted. A confirmation email of the refund will be given to you and you can check your balance in ‘My Payment’ tab -> Transaction History section displaying the amount refunded.
VAT Tax Refund Conditions for Standard Products and Services
VAT rate for standard products and services in UAE/Dubai has been fixed at 5%. If the input tax on purchases is greater than the output tax collected by business owners/firms and other service providers, VAT is refundable.
For example, A person, paying an input tax of 1500 DEH but collecting an output tax of 1000 DEH on sale, can claim a refund of 500 DEH. End customers cannot claim input vat refund Dubai.
However, business firms/owner are entitled to tax refund only under the following circumstances:
- The business has to be registered under VAT.
- The traders/businesses must charge VAT reasonably. Inappropriate VAT
- charged on goods and services shall not be refundable.
- Proper VAT invoices must be presented to authorities for claiming input tax returns.
- Amount paid or payable after six months of supply date is not eligible for refund claims.
According to FTA (Federal Tax Authority) announced that The VAT Refund Scheme for Tourists in UAE
Products and Services not eligible for TAX Refunds
Zero-Rated: Zero-rated products and goods are VAT taxable. The rate of the VAT is 0%. Any supply made has to be reported when filing Tax returns. Basic educational and health services, export of good outside GCC, first sale/rent of residential buildings etc have been zero-rated.
Any input tax paid on zero-rated products and services comes under Tax refund policies. The FDA is the final authority on this. Businesses supplying zero-rated products and services have to register for VAT.
Exempted: Any input tax charged for goods and services in the exempted category is non-refundable. Exempted supplies include local transport, financial services like life insurance as well as zero charge financial services. Businesses supplying only exempted products and services need not register for VAT.
VAT UAE Tax Refund Conditions For Tourist
Effective from 18 November 2018, Tourist and visitors are now liable to claim for the tax refund on Value Added Tax (VAT) incurred on purchases while they are in the UAE.
It is applicable only on tax invoices that are issued from 18 November 2018 and it allows tourists and visitors to claim for the tax refunds on their purchases.
The recovery of payment can be done via a fully integrated electronic system which connects suppliers that are registered under the ‘Tax Refund for Tourists Scheme’ with all ports of entry and exit from the UAE. For claiming the tax refund, visitor/ tourists have to collect the tax invoice that fulfills all legal requirements from the supplier.
Tourist Guide: How to claim vat refund in UAE for tourist [A Visual Guide]
After then, the tourists have to submit the claim to the system operator directly and collect the refund from the operator.
Read more: VAT Refund Scheme for Businesses in UAE