A Complete Guide to VAT Refunds in the UAE: Eligibility, Application Process, and More

Value Added Tax (VAT) is a consumption tax that is levied on most goods and services in the UAE. While this tax may seem like an additional expense, the UAE government provides several avenues for refunding VAT under specific circumstances. Whether you are a tourist, a foreign business, or a UAE national building a new residence, understanding how to claim VAT refunds can save you a significant amount of money. This comprehensive guide will explain who is eligible for VAT refunds and how to claim them in the UAE.

What is VAT and Why Should You Claim It?

VAT is a tax levied on the value added to goods and services during their production and distribution. In the UAE, the VAT rate is 5%, and while businesses and individuals pay VAT when purchasing goods or services, there are schemes that allow them to claim back the VAT paid under specific circumstances. These refund schemes are designed to make the UAE a more attractive destination for tourists, international businesses, and nationals building new homes.

Here’s a table summarizing the key details from the blog about VAT Refunds in the UAE for quick reference:

VAT Refund Scheme	Eligibility Criteria	Required Documents	Application Process	Timeframe
VAT Refund for Tourists	Non-resident tourists; Minimum purchase AED 250 at participating stores	Passport, tax invoices, goods purchased	Submit invoices and goods at VAT refund kiosks at airports	Refund within 5 business days after approval
VAT Refund for Business Visitors	Foreign businesses with no establishment in the UAE; Reciprocal VAT refund agreement	Tax invoices, proof of payment, authorized signatory’s passport	Create e-Services account, submit online application	Refund processed within 4 months of submission
VAT Refund for UAE Nationals Building New Residences	UAE nationals holding a Family Book; Building a new private residence	Family Book, Emirates ID, property completion certificate, proof of land ownership, contractor invoices	Submit application via FTA e-Services portal	Refund processed after review, generally within 4 months
General VAT Refund for Taxable Persons	Registered VAT taxpayers in the UAE	Tax invoices, proof of payments, bank account details	Submit VAT refund request via FTA e-Services portal	Refund processed within 5 business days after approval

This table provides a concise overview of the various VAT refund schemes, eligibility criteria, required documents, and timelines for each type of claim in the UAE.

VAT Refund for Tourists

Who is Eligible for VAT Refunds in the UAE as a Tourist?

Tourists visiting the UAE can claim VAT refunds on purchases made during their stay. To qualify for the refund, the following conditions must be met:

1. Non-Residents: Only tourists who are non-residents of the UAE are eligible. If you have a residence or work permit in the UAE, you are not eligible for this refund.
2. Minimum Purchase: To qualify for a refund, the minimum total value of purchases at participating retailers must be AED 250.
3. Eligible Goods: The goods must be taken out of the UAE in the same condition they were purchased. Consumables like food do not qualify, but items like clothing, electronics, and souvenirs are eligible.
4. Refund Timeframe: Goods must be exported from the UAE within 90 days from the date of purchase.

How to Claim VAT Refunds as a Tourist

1. Shop at Participating Stores: Ensure the store is registered for the VAT refund scheme and obtain the tax-free tag or form along with your tax invoices.
2. Visit Refund Kiosk at the Airport: At the airport, head to a VAT refund kiosk to present your passport, goods, and tax invoices for inspection.
3. Submit Documents: The kiosk will process your documents, and you can opt for a refund either via credit card or cash, depending on your preference.
4. Goods Inspection: Be prepared for a possible inspection of your purchased goods. Have your tax-free tags and invoices ready for verification.

This process is quick and simple, allowing tourists to claim VAT refunds in an efficient manner.

VAT Refund for Business Visitors

Who is Eligible for VAT Refunds as a Business Visitor?

Foreign businesses or business visitors to the UAE may also be eligible for VAT refunds under specific conditions. To qualify:

1. No Establishment in the UAE: The business must not have a registered establishment in the UAE.
2. Non-Taxable Entity: The business visitor must not be a taxable person or carry on business in the UAE.
3. Reciprocal Agreements: The business visitor’s country must have a reciprocal VAT refund agreement with the UAE.
4. Minimum Refund Amount: The claim for a VAT refund must exceed AED 2,000.

How to Claim VAT Refunds as a Business Visitor

1. Create an e-Services Account: Visit the UAE Federal Tax Authority (FTA) portal and create an e-Services account. After registering, create a taxable person account or a special refunds profile.
2. Complete the Refund Form: Navigate to the ‘Business Visitor Refunds’ section, complete the form, and submit all required documents including tax invoices and proof of payment.
3. Submit Documents: Along with the online submission, send the original hard copies of tax invoices and the Tax Compliance Certificate attested by the UAE Embassy.
4. Track the Status: Applicants can track the status of their refund request via the e-Services portal. If additional information is required, the application status will be marked as “Resubmit.”

The FTA typically processes refunds within four months, and successful applications will receive their refund within 10 business days.

VAT Refund for UAE Nationals Building New Residences

Who is Eligible for VAT Refunds When Building a New Residence?

UAE nationals who are constructing a new home can apply for VAT refunds on certain construction-related expenses. To qualify for this refund:

1. UAE Nationals Only: Only UAE nationals who hold a valid Family Book are eligible for this scheme.
2. New Residence: The residence must be a new private home, used solely for personal living and not for commercial purposes.
3. Qualifying Expenses: VAT on building materials, contractor services, architects, and engineers, as well as transport and clearing agent fees for imported building materials, can be reclaimed.

How to Claim VAT Refunds for Building a New Residence

1. Prepare Documents: The applicant must provide a Family Book, Emirates ID, property completion certificate, site plan, proof of land ownership, and proof of payments to contractors.
2. Submit the Application: Log into the FTA e-Services portal, create a special refunds profile, and submit the online application with all required documents.
3. Verification Process: The FTA will review the application, and if eligible, the claim will be sent to a Verification Body. Additional documentation may be required to verify the VAT-paid expenses.
4. Refund Issuance: Once the claim is approved, the VAT refund will be processed and issued to the applicant.

Retention Payments: If the UAE national intends to make retention payments to contractors, they can submit a subsequent claim for VAT related to these payments within six months.

General VAT Refund Process for Taxable Persons

Who Can Claim VAT Refunds?

Taxable persons, which include businesses and individuals who are registered for VAT in the UAE, can claim VAT refunds when their input tax exceeds their output tax. This claim is made after submitting the VAT return and involves the following steps:

1. Log into the e-Services Portal: Navigate to the ‘VAT Refunds’ section.
2. Complete the Refund Form: Fill out the VAT Refund Request form, providing necessary bank details and a bank account validation letter.
3. FTA Review: The FTA aims to review the claim within 20 business days, and approved refunds are typically processed within 5 business days.

Important Considerations for VAT Refund Claims

• Document Retention: Keep all relevant documents, such as invoices, proof of payments, and tax certificates, as they are necessary for both the claim process and potential audits.
• Timely Submission: Ensure that the application is submitted within the prescribed timeframe. For new residence claims, this is within 12 months of occupancy or completion certification.
• FTA Compliance: Accurate forms and required documents are critical for the approval of VAT refund claims. Incomplete or incorrect applications may lead to delays or rejection.

How a Tax Agency Can Simplify the VAT Refund Process

A tax agency can play a crucial role in assisting businesses and individuals with VAT refund claims by providing expert guidance through the complex process. They help ensure that all documentation is correctly prepared and submitted, minimizing the risk of errors or rejections. Tax agencies like Excellent Accountants are well-versed in the requirements set by tax authorities and can ensure that all eligibility criteria are met, including the correct categorization of expenses and proper invoice management. Additionally, they can act as intermediaries between the applicant and the tax authorities, facilitating smooth communication and timely processing of refunds. Their expertise not only saves time but also ensures that businesses and individuals receive the maximum refund they are entitled to under the law.

Conclusion

Claiming a VAT refund in the UAE can be a straightforward process, provided you meet the eligibility criteria and follow the correct procedures. Whether you are a tourist, a business visitor, or a UAE national constructing a new home, there are opportunities to reclaim VAT paid on purchases and services. By understanding the requirements and adhering to the submission timelines, you can ensure a smooth and successful VAT refund claim.

With the help of the Federal Tax Authority’s e-Services portal and clear guidelines for each refund scheme, reclaiming VAT in the UAE is an accessible and efficient process for those who qualify.