Are you looking for how to claim VAT refund in Dubai and across the UAE? In this post, you will get all information about VAT refund Conditions, who can claim for refund and process to claim VAT refund.
The UAE Federal Tax Authority has appointed Planet as its unique tax refund operator for the Tourist Refund Scheme which will be rolled out in November 2018.
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.
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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 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.
In this article, we try to understand the various scenarios in which vat refund is applicable to the newly introduced VAT tax in UAE/Dubai.
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.
Read more: VAT Refund Scheme for Businesses in UAE