A foreign company that conducts business in the United Arab Emirates is eligible for VAT (Value Added Tax). According to the Federal Tax Authority’s regulations and norms (FTA), the rule improves business profitability with the United Arab Emirates.
All registered companies must file a VAT return during the tax period detailing sales, purchases, and input VAT paid. The output VAT is the amount received from sales, while the input VAT is what you pay to the supplier for assets/expenses. It is possible to change the output VAT amount with the eligible input VAT.
Who can apply for a VAT Refund in UAE?
According to FTA laws, not all business organizations can apply for a VAT Refund.
- Foreign companies should not maintain a permanent presence within the UAE or other participating countries. The GCC countries which have imposed VAT on foreign companies are known as implementing nations.
- A VAT refund is only possible if the foreign company is not considered a tax-paying person in the UAE.
- A foreign company that does not conduct business in the UAE is considered qualified.
- A foreign company can be eligible for a VAT refund if it operates a business in the country where it is registered.
Which Business/Company cannot ask for a VAT Refund?
- A VAT refund is not available to foreign enterprises that make taxable supplies within the UAE. If any firm accounts for VAT according to the Reverse Credit Mechanism requirements, they can be eligible.
- According to UAE VAT Law, the taxable person cannot recover input tax on products or services available for personal use, such as entertainment and motor vehicles.
- If the foreign company is from another country that does not allow VAT refunds to UAE companies in comparable circumstances, they cannot ask for a VAT Refund.
- A business that operates as a travel company in the United Arab Emirates but is not a UAE native is not entitled to a VAT refund.
Documents Required For VAT Refund
- A passport copy with Signature.
- Evidence for the authority of Signature.
- Tax receipts with proof of payment and a TRN are required to support a VAT refund claim.
- A statement indicating the percentage of input tax that the company can collect.
- The appropriate Tax Compliance Certificate from the relevant authority is required.
These are the documents that the business should compile and submit to the Federal Tax Authority (FTA). The administration should enlist the help of a financial consulting service to ensure the company does not run into any issues while filing for a VAT refund.
Get In Touch With Best VAT Consultancy Firm
The VAT group at NUFCA assists services in navigating the new UAE tax environment and providing solutions made to their business model and industry. The group consists of VAT experts with decades of combined experience, which offers our domestic and foreign customers the benefit of a global approach to service delivery. Furthermore, because many of our employees have “internal” experiences, the customer may rest assured that our system will be more practical than theoretical.