In a move aimed at facilitating international business transactions, the Federal Tax Authority (FTA) of the United Arab Emirates (UAE) has announced the opening of the VAT Refund application window for unfamiliar organizations under the “Foreign Business Refund Scheme,” effective from 1st March 2022. This scheme allows eligible entities to claim a refund of Value Added Tax (VAT) incurred during the 2021 calendar year. The deadline for submitting refund requests is set for 31st August 2022.
Understanding the VAT Refund Scheme
Under the Business VAT Refund Scheme, foreign businesses operating in the UAE can seek reimbursement for VAT expenses, provided they meet certain criteria.
Defining a Foreign Business
A foreign business, as recognized under this scheme, refers to any business entity registered with a competent authority outside the UAE.
Eligibility Criteria for VAT Refund
Foreign businesses can claim a VAT refund under the following conditions:
Absence of a physical presence or fixed establishment in the UAE or any Implementing State.
Non-registration as a Taxable Person in the UAE.
Conducting business activities and being registered for VAT in a foreign jurisdiction.
Hailing from a country that reciprocates VAT refunds to UAE entities under similar circumstances.
Exclusions from VAT Refund Eligibility
Certain entities are not eligible for VAT refunds, including:
Foreign businesses engaged in supplies within the UAE.
Input Tax that is deemed irrecoverable as per FTA regulations.
Entities from jurisdictions that do not offer reciprocal VAT refunds (excluding GCC-registered companies).
Non-Resident Tour Operators.
Application Process Timeline
Each refund claim covers 12 months, except for GCC state residents not categorized as Implementing States. The application process unfolds in the following steps:
Registration on the FTA portal eservices.tax.gov.ae.
Submission of company details via the registered email portal.
Completion and submission of the refund form.
Dispatching all required documents to the Federal Tax Authority within one month of the refund request.
Processing of the refund form within four months by the FTA.
Issuance of the refund within 10 working days upon approval.
Documentation Required for Refund Submission
To initiate a VAT refund claim, the following documents must be provided:
Proof of incorporation in the home country.
Tax registration certificate (if applicable).
Evidence of exempted or non-business activities in the home country.
Original tax invoices with payment proof for the claimed refund.
Copy of the Authorized Signatory's passport.
Proof of Authority of the Authorized Signatory.
Bank account details.
Submission Guidelines
All documents must be submitted in original hard copy format with proof of payment. Softcopies are not accepted, and failure to comply may result in the rejection of the refund request. Printed copies of invoices and other relevant documents should be sent to the Federal Tax Authority within one month of the refund application, accompanied by a prepaid envelope for return shipment post-verification.
By streamlining the VAT refund process for foreign businesses, the UAE aims to foster a more conducive environment for international trade and investment, solidifying its position as a global business hub.