VAT Refund Scheme for Businesses in UAE

The FTA has announced a proper mechanism for foreign companies visiting UAE for business purposes to claim a refund of the taxes paid by them on expenses in the country. The scheme introduced by the FTA is more or less similar to the one already in practice in some European countries. Continue reading to find out more.

Under the foreign VAT refund scheme, eligible foreign companies can claim a refund of VAT paid by them on expenses in UAE. However, there are certain conditions which need to be fulfilled.

A foreign business, for VAT purposes, is any business that is authorised and registered with an eligible authority in the place where it is located.

Foreign Businesses VAT Refund Scheme in UAE

A foreign business can apply for VAT refund under this scheme as per the following rules:

1. Businesses situated in a GCC State where VAT has not been implemented yet

A business which is registered and located in a Gulf State where VAT is not in practice, as of now, can claim VAT refund under this scheme. This includes all the GCC member States, except for Saudi Arabia and the UAE. Businesses situated in these VAT-free GCC States can claim VAT refund in the UAE.

2. Businesses situated in a country other than GCC States can claim a refund of VAT only if they fulfill the eligibility conditions mentioned below.

Conditions for eligibility under the Foreign VAT Refund Scheme

  • The business must be registered officially as a company with the eligible authority in the state/jurisdiction where it is located.
  • Should not have a registered place of business or fixed property in the UAE or any other gulf state where VAT is practiced.
  • Should not be registered (or liable to register) as a taxable person under UAE VAT. ( Check out who should register for VAT UAE )
  • The business/person claiming a refund of VAT under this scheme must be from a country that offers the same facility (of claiming a refund of VAT ) to UAE businesses in such situations.

Conditions for ineligibility for Business VAT Refund Scheme

There are certain conditions under which even a foreign business is not eligible to claim VAT refund on expenses in UAE.

  • VAT refund cannot be claimed on goods or services on which tax recovery is not allowed.
  • Foreign tour operators cannot claim tax refund under this scheme.

The business VAT refund scheme is a really good option for those foreign companies that visit the country for the business purposes. The official scheme for claiming the refund of VAT on expenses made by foreign businesses has not been rolled out yet. Stay tuned to this page for updates.

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