Full details about the VAT refund available in the UAE

Tourists and visitors can claim VAT refunds on purchases made in the UAE during their stay. They will recover their payment through a fully integrated electronic system. It connects retailers registered in the ‘Tax Refund for Tourists Scheme’ with all UAE ports of entry and exit.

In this article, you will learn everything about the VAT refunds available in the UAE. Let us observe:

1. What exactly is a VAT refund?
2. Visitors on business
3. New residents
4. Tourists
5. UAE VAT refund for foreign businesses
6. Form for the VAT refund
7. How can Connect FZ help you?

1. What exactly is a VAT refund?

When the input tax on a VAT return exceeds the output tax, the taxpayer may request a refund after filing their return.

1.1. Refunds have a timetable

When a taxpayer submits a refund claim, the FTA will process and review the application within 20 business days. They will notify the taxpayer whether the FTA accepts or rejects the claim. If the process takes longer than 20 days, they will notify the taxpayer and extend the deadline.

2. Visitors on business

Foreign businesses that meet the following requirements may apply for a VAT refund:

• They have no place of business or fixed establishment in the UAE or any other GCC member state; and they do not tax them in the UAE.
• They are not conducting business in the UAE; and they are in the process of establishing a business and have registered as an establishment with the competent authority in the jurisdiction in which they are located.
• Each refund claim has a 12-month time frame, and the minimum amount of each tax claim submitted by business visitors under the Foreign Businesses Scheme is AED 2000.

3. New residents

The new residence VAT refund scheme is available to UAE nationals who meet the following eligibility criteria:

• A natural person who is a UAE national must file the claim.
• The claim should be for a newly constructed building that they will use solely as the person’s or the person’s family’s residence.

Hence, such a person will be able to claim a refund of the tax paid on the expenses incurred in constructing the residence under this scheme.

3.1. Eligibility

The following expenses are eligible for a VAT refund under this scheme:

• Contractor services include builders’, architects’, engineers, and other similar services required for the successful construction of the residence.
• Building materials are goods of the type that are typically used by builders in the construction of a residential building or its site. This excludes furniture and electrical appliances.
• Hence, you must submit the refund form to the FTA within 6 months of the building’s completion date. The completion date is the earlier of:
• When they occupy the structure.
• When the Municipality certifies that they have completed the building as the FTA requires.

4. Tourists

To be eligible for this type of VAT refund; a tourist must meet the following criteria:

• He must purchase goods from a retailer who participates in the “Tax Refund Scheme for Tourists.”
• The Federal Tax Authority’s refund scheme does not exclude goods.
• He must expressly intend to leave the UAE within 90 days of the date of supply, along with the purchased supplies.
• He has three months from the date of supply to export the purchased goods out of the UAE.
• The Federal Tax Authority’s requirements and procedures must carry out the process of purchasing and exporting goods.

4.1. Vat refund plan for tourists in the United Arab Emirates

Planet VAT refund is a fully automated system developed through collaborations between the FTA and global operator Planet. It allows registered retailers and shoppers to easily navigate the VAT refund process. These VAT refunds exist because of collaborations between these two entities.

Planet’s fully integrated electronic system enables registered retailers and visiting shoppers to easily expedite the Planet VAT refund process. Here is how it works:

• The customer requests a VAT refund and shows the necessary travel documentation (travel passport or GCC National ID card) used to enter the country.
• The retailer enters the necessary information into Planet’s electronic system to process the claim.
• Plus, the retailer will affix a Tax-Free tag to the back of the shopper’s original sales receipt.
• They scan the Tax-Free tag to associate the purchase with the purchaser’s GCC National ID card or travel passport.

It is as simple as that. The fully digital process issues shoppers a Tax-Free tag in 2 minutes with a minimum spend of AED 250. As of October 2018, approximately 4,000 retailers in the country had been registered in the electronic system; which they can identify by posters displayed at storefronts visible to visitors.

4.2. Where can tourists receive vat refunds for shopped items in the UAE?

You must valid all claims at various validation points, which are special devices located at departure points such as seaports, border ports, and airports in the UAE. If you are leaving Dubai as a tourist, for example, you can complete the process at the VAT refund counter at Dubai Airport. The following is how it works:

• Before checking in your luggage, go to the designated validation point.
• Present the original receipt with the Tax-Free tag, the products purchased, and copies of your credit card and passport at the immigration counter.
• After successful validation, you can choose to receive your refund in cash or by credit card.
• They have processed the refund.

Tourists are entitled to a refund of 85 percent of the total VAT paid. Planet deducts the remaining 15% as an administration fee. Also, keep in mind that they limit cash refunds to AED 7,000 per day under new Federal Tax Authority regulations.

They did this to reduce shoppers’ reliance on cash during financial transactions and to assist them in taking advantage of the country’s technological advancements. If they have made the transactions in question with a credit card, there is no such limit on the maximum recoverable amount.

4.3. Kiosks with self-service

Tourists can now claim VAT back on their thanks to newly installed self-service kiosks at departure points. The fully automated service, which is being rolled out in airports and other ports, streamlines the process by identifying tax eligibility for refunds; verifying that the tourist owns the goods, and enabling tax recovery.

Employees are, of course, always available to lend a helping hand when needed. These kiosks are currently available in 12 locations throughout the UAE, including Dubai International Airport, Abu Dhabi International Airport, Al Maktoum International Airport, and others.

So, they require validation of Tax-Free tags within 90 days of purchase. If this is not done on time, the Tax-Free tags will expire, and concerned shoppers will be ineligible for any claims.

4.4. Goods ineligible for vat tourist refund in the UAE

Except for the following categories, all VAT-applied goods or products are eligible for a tax refund:

• Aircraft, automobiles, and boats
• Products that they have consumed partially or completely in the country or any GCC Implementing State.
• Goods that tourists do not have on hand when they depart from the UAE.

We recommend allowing enough time before departure to process validations. Arrive at the airport an hour or so before your flight’s departure time, for example.

4.5. Who is eligible for a vat refund for tourists in the United Arab Emirates?

Not all tourists are eligible for VAT refunds on purchases made in the country. So, traveling tourists must fall into one of these categories under current regulations to be eligible for Planet VAT refund UAE.

• Travelers aged 18 and up who are not UAE residents.
• VAT refunds are available to GCC nationals.
• On flights departing from the United Arab Emirates, there is no crew.

Additional regulations may apply to GCC nationals studying in foreign countries.

5. UAE VAT refund for foreign businesses

Foreign businesses in the UAE can claim a VAT refund. The deadline for non-resident businesses to apply for Value Added Tax (VAT) refunds in the UAE is quickly approaching.

Hence, to recover VAT incurred during the 2018 calendar year, they must submit applications to the UAE Federal Tax Authority (FTA) by 1 October 2019. Foreign companies should determine whether they are eligible for a refund and begin calculating the amount of UAE VAT they can reclaim.

This program is open to businesses that meet the following requirements:

• There is no place of establishment or fixed establishment in the UAE;
• You are not a taxable person in the UAE;
• You are not carrying on a business in the UAE;
• And you are carrying on a business and registered for VAT (or equivalent) elsewhere.

6. Form for the VAT refund

They include the following fields on the VAT refund form:

6.1. TRN (Tax Registration Number).

Firstly, this field is pre-populated based on the taxpayer’s account information in the User Profile tab. It is a good idea to double-check that they listed the correct TRN.

6.2. The total amount

Secondly, the total amount of Excess Refundable Tax (in AED) is as follows:

They use the formula Refunds – Penalties = Excess Refundable Tax to populate this field. This includes all refunds reported in previously submitted VAT returns, as well as all administrative penalties owed, except the late registration penalty.

6.3. The amount you want to be refunded (in AED)

Thirdly, the amount you enter must be equal to or less than the total amount of excess refundable tax displayed in the Total amount of Excess Refundable Tax field.

6.4. Excess Refundable Tax Remaining Amount

This field is pre-populated with the amount of refundable tax that you can apply for in the future.

6.5. Penalty for late registration (in AED)

This field is pre-populated based on the penalties imposed on you and whether or not you have paid the penalty amount:

• If you have no penalties, the field will show Zero (AED).
• If they have charged you a penalty and you have paid it, the field will show Zero (AED).
• And if you have been charged a penalty but have yet to pay it at the time of claiming this refund; the penalty amount will be displayed in the field. Plus, if the refund amount is negative after deducting the penalty amount, they will reject your application automatically. Only they will submit the balance to the FTA for refund claim purposes if the refund amount is positive after deducting the penalty amount.

6.6. Authorised Signatory and Declaration

Finally, the system pre-populates the authorized signatory in both English and Arabic. Before clicking the Yes button to submit the form, make sure you have thoroughly read the declaration.

7. How can Connect FZ help you?

That is all there is to know about VAT refunds in the UAE. If you would like to receive further assistance, please do not hesitate to contact us. From legal assistance to business setup services, we have over 20 years of expertise in the UAE’s market. Whether you are looking to set up a company in the UAE’s free zones or in the Mainland, or even searching for the best accounting consultants, you can rest assured that our experts will offer you value added services that include everything you need.

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Would you like to contact us at Connect FZ to obtain more information on VAT refunds available in the UAE? If you have any questions, take a step forward and give us a call! You can do so through the following number: +971 43 316 688. In addition, you can email us at contact@connectfz.com. After you do this, you will be able to communicate with one of our experts. We are ready to assist you!

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