How to Claim VAT Refund in UAE?

The Federal Tax Authority (FTA) introduced Value Added Tax (VAT) in United Arab Emirates (UAE) w.e.f 1st January 2018. It also issued Executive Regulations for the smooth implementation of VAT.

As per the VAT law, UAE nationals building new residences, tourists and foreign businesses can claim VAT refunds. This article explains all the VAT refund cases and how to claim VAT refunds in UAE.

What is a VAT refund in UAE?

You can file for a VAT refund when the input tax is higher than the output tax for a tax period. You must do it after filing the VAT return or later whenever a VAT refund is due.

Step by Step process to claim VAT refund in UAE?

You shall follow the below steps to claim a VAT refund:

Step 1: Log in to FTA e-Services Portal using username and password.

Step 2: Go to the ‘VAT’ tab and then to the ‘VAT Refunds’ tab to access the VAT refund form.

Step 3: Now, click the ‘VAT Refund Request’ to access the refund form.

Step 4: Please fill in the required fields in the form. 

Note: Fields marked with an (*) asterisk are mandatory and must be filled in to submit the form. Also, the VAT portal automatically retrieves a few fields. 

Step 5: Once you complete the form, click the ‘Submit’ button.

When will you get the VAT refund?

Usually, FTA will review the VAT refund application, process and notify you within 20 days from the application submission date. The authority either accepts or rejects the VAT refund claim. The authority will credit the refund within five business days once your claim is approved.

However, FTA may take more than 20 days to process the VAT refund application and notify you accordingly.

VAT refund for foreign businesses

The authority introduced the ‘VAT Refund Scheme for Foreign Businesses’ to enable foreign businesses to claim VAT refunds in certain cases. This scheme allows eligible foreign business visitors to claim back the VAT.

Below are the eligibility criteria for foreign business owners to apply for VAT refunds in UAE:

• You should not have a fixed establishment or place of establishment in the UAE or an implementing state.
• You are not a taxable person in the UAE.
• You are not carrying any business in UAE.
• You must conduct a business and register as an establishment with a competent authority in your country.

It is to be noted that you can claim a refund once every 12 calendar months. Also, the minimum refund amount to be claimed must be more than AED 2000.

VAT refund for UAE nationals building new residences

A person who owns or acquires land to build his/her own residence is entitled to get a special refund from the FTA. This refund is limited to the VAT incurred on specified expenses related to constructing a new residence.

You must be a UAE national and provide supporting documentation, such as a family book or passport, proving your national status. Further, to claim this refund, you don’t have to set up an e-services account; instead, you can use the downloaded refund form from the FTA website.

You must meet the following criteria to claim the VAT refund:

1. The expenses must be used solely on a newly constructed building for residential purposes by the applicant or their family.
2. The expenses should be spent on specified goods and services.
3. Services provided by contractors, including builders, engineers, architects and other similar services. 
4. Goods and building materials incorporated by the contractor.

Below is the list of goods that are eligible for VAT refund:

• Central air conditioning and split units
• Doors
• Window frames and glazing
• Flooring (except carpets)
• Fire alarms and smoke detectors
• Kitchen sinks
• Work surfaces
• Fitted cupboards
• Wirings
• Sanitary units
• Shower units

Further, you must submit the refund form to the FTA within 12 months of the completion of the building. The date of completion is the earlier of:

• When you occupy the building
• When you get completion from the UAE competent authority 

VAT refund for UAE tourists

FTA implemented the ‘Electronic Tax Refund Scheme for Tourists’ to allow UAE tourists to claim refunds of VAT paid on their purchases.

However, the seller must satisfy the below conditions so that the tourists can claim the VAT refund:

• The seller/ retailer must be registered under UAE VAT and have a Tax Registration Number (TRN)
• The goods must not be excluded from the refund scheme mentioned by the authority.
• The retailer/seller must submit a request to participate in the scheme.
• The retailer must meet the requirements specified and regularly submit tax returns and pay due taxes.