Update on VAT refund scheme for Business Visitors1
The FTA has notified conditions and procedure for grant of refund for business visitors in UAE to facilitate eligible foreign businesses/business visitors to file VAT refund claims for expenses incurred in UAE. We have elucidated overview of the key aspects of the scheme below:
Who can claim Refund as a Business Visitor
- Foreign businesses must fulfill the following conditions to be eligible for a Refund:
- They have no place of establishment or fixed establishment in UAE or the implementing state
- They are not a Taxable Person in the UAE
- They are not carrying on Business in the UAE
- They are registered with a competent authority and conducting business outside the UAE
- As an exception to the eligibility
discussed, VAT Refund scheme would not be applicable for the
- Foreign business is engaged in making supplies in the UAE (except in case where the recipient is liable to pay VAT under reverse charge)
- Input tax incurred on the goods or services is non-recoverable under the UAE VAT legislation
- The foreign business is from a country that does not provide VAT Refunds to UAE entities
- The foreign business is a non-resident tour operator or a foreign government entity
- The amount of VAT involved in Refund application is below AED 2000
When can the Refund application be submitted
- The period of each Refund claim shall be a calendar year
- For the calendar year 2018, Refund application can be filed after 2 April 2019
- For subsequent calendar years (for instance, 2019), Refund application can be filed after 1 March of following calendar year (i.e., 1 March 2020)
- The last date of filing Refund application will be six months from the date businesses can first make a claim
Key Conditions/Procedural Aspects for a claim of VAT Refund
- Original hard copies of all invoices with proof of payment, certificate of incorporation/registration along with the Tax registration certificate or equivalent attested hard copy are required to be sent along with the application
- All documents must be submitted either in Arabic or English. No other language will be accepted for processing refund claim
- Foreign Businesses belonging to notified countries (Appendix A) are only eligible under this scheme
- Foreign businesses can only claim the refund of VAT paid on expenses, and they are not entitled to seek exception from VAT except under any other specific reliefs
Update on Refund of VAT Paid on Goods and Services imported/procured in connection with Expo 2020 Dubai2
The FTA has introduced Cabinet Decision No. (1) of 20193 for the grant of VAT refund on goods and services imported/procured in relation to Expo 2020 to be held in Dubai during 20 October 2020 to 10 April 2021. Pursuant to the above, the FTA has also released detailed guide envisaging conditions to be fulfilled, the procedure to be adopted and information required for the claim of such refund. We have outlined below the critical aspects, to be noted, in relation to the above-mentioned scheme for businesses that are eligible to claim such a refund.
Key points to be noted for the claim of Refund
- Official Participants4 of Expo 2020 whether registered under UAE VAT (in case where the Official Participant is making supply or importing goods/services exceeding registration threshold of AED 375,000) or unregistered are eligible for VAT refund.
- VAT can be reclaimed by an Official Participant in the following cases-
- Goods and Services imported or acquired in direct connection with the construction, installation, alteration, decoration and dismantlement of their exhibition space or operation of such exhibition space or any presentation within the Expo 2020 site;
- Goods and Services imported or acquired for the actual operation of the office of the Official Participant (provided that the value of each Good or Service, for which claim is made, is not less than AED 200); and
- Import of Goods for personal use of the Official Participant’s Section Commissioner-General5, Section Staff6 and the Beneficiaries7.
- In order to reclaim VAT under Category A above, the Official Participant must be in possession of a Certificate of Refund Entitlement by the Bureau8
- Refund application will need to be
filed in the following manner-
- For Official Participant registered under UAE VAT - Refund of VAT recoverable is to be filed in regular VAT returns.
- For Official Participant not registered under UAE VAT - Application for refund will need be made in the prescribed form and manner on a monthly basis (if refund value exceeds AED 10,000) or quarterly basis (if refund value is below AED 10,000) as the case may be.
- Where a refund has been granted to the Official Participant in respect of any import of goods, the goods cannot be sold for consideration or transferred free-of-charge without the prior consent of the Bureau, and payment of the tax.
1 VAT Refund for Business Visitors User Guide – April 2019
2 Refund of VAT paid on Goods and Services connected with Expo 2020 Dubai – User Guide for Official Participants – March 2019
3 Cabinet Decision No. (1) of 2019 on the Refund of Value Added Tax paid on Goods and Services connected with Expo 2020 Dubai
4 Countries and Inter-governmental organisations which have received and accepted the official invitation from the State to participate in the Expo 2020 Dubai in a non-commercial capacity as an exhibitor
5 Representative appointed by Official participant in accordance with Article 13 of the Paris Convention of 22 November 1928 relating to International Exhibitions
6 The staff of the Section Commissioner-General, the deputy of the Section Commissioner-General, the pavilion director, and other direct employees of the Section Commissioner-General
7 Beneficiaries: Family members of the Section Commissioner-General, deputy Section Commissioner-General and pavilion director, consisting of spouses, ascendants, descendants under the age of 21, and personnel necessary for the care of such family members who habitually do this specific work for those family members (where applicable)
8 The Bureau Expo 2020 Dubai established by virtue of Decree No 30 of 2014 issued by the Ruler of Dubai
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.