What are the conditions for refund for UAE’s VAT?

For a tourist to claim VAT refund on purchases he made in the UAE, he must fulfill certain conditions:

1. Goods must be purchased from a retailer who is participating in the ‘Tax Refund for Tourists Scheme’

2. Goods are not excluded from the Refund Scheme of the Federal Tax Authority

3. He must have the explicit intention to leave the UAE in 90 days from the date of supply, along with the purchased supplies

4. He must export the purchased goods out of the UAE within three months from the date of supply

5. The process of purchase and export of goods must be carried out according to the requirements and procedures determined by Federal Tax Authority.

Do tourists in the UAE also have to pay VAT?

Tourists will have to pay VAT when making purchases within the UAE, however, they can request refunds on VAT at their departure port when leaving the country. For instance, travelers to Dubai can request VAT refunds when flying out from the Dubai International Airport through self-service kiosks.

However, bear in mind that there are only VAT refunds for tourists in the UAE when they purchase from retailers who are participating in the “Tax Refund for Tourists Scheme”.

Should I be charged VAT on a mobile top-up card?

The cost differs depending on whether it is purchased from the telecom provider or a retail store. Read More 

Can a company de-register from VAT without paying existing fines?

You cannot de-register from VAT without paying the fines first.

To solve this, you must submit the missed returns on the Federal Tax Authority portal immediately. Even if they are zero returns, this needs to be done to avoid further charges. I advise paying the existing fines, then completing a reconsideration form asking the FTA to waive the fines imposed.

The form can be found on the FTA website, but the form and all supporting documentation must be submitted in Arabic. To apply for reconsideration and de-registration, the FTA says you must have paid any outstanding tax and penalties first. Read More 

We started new LLC and have not registered for VAT till now?

Question : We started new LLC and have not registered for VAT till now? And the new company will join with our tax group on Q3 2019. Now one of our group company sold materials to new unregistered company for 1,70,000/- AED. I need to know the procedure to make invoice to the new company i.e with or without vat. Also if we raised tax invoice, the new company will eligible for Input tax credit on Q3 as per Articles 56 of UAE Vat Law.

Answer: The Group Company will have to raise Tax invoice on the new unregistered entity. The new unregistered company will be able to claim input tax credit as long as the goods purchased are used for taxable supplies post-registration i.e the goods must be in stock on the date the new entity is registered for VAT. In case of services obtained, they must be related to the taxable supplies being rendered by the new entity.

Can I avoid a Dh 22,000 penalty imposed by the FTA?

If you fail to file the return the FTA does not recognize any payments that you have made. Therefore you get fined not only a later filing fee but also interest on the amount of the tax due, until the point at which you file the return.

The penalty for missing the filing deadline is Dh 1,000 for the first offence and then Dh 2,000 for every subsequent missed deadline.

Read More.

What is the best way to make a VAT payment to the Federal Tax Authority?

Making payment should be the easy part of completing the VAT filing process but many people have experienced issues. Many of the well-known banks still do not recognize the GIBAN, which is the unique IBAN number allocated to every VAT registrant.

Read More.

My landlord has issued a backdated invocie for VAT for 2018, do I have to pay?

Question: My landlord have issued me a back dated invoice for the VAT for rental in 2018. I am obliged to pay, otherwise they will not renew my Tawtheeq for my company. Since the VAT invoice is for 2018 and 2019, I need to know if I am able to claim it for this quarters’ filing.

Answer: Since we do not have the details of the invoices and the current return period, we can only give a general feedback on the query.

In case of input VAT, the input VAT claim can be made for the previous and current return period only. You will not be able to claim for back dated invoices beyond previous return period.

How do I reclaim VAT as a business tourist in the UAE?

A foreign business visitor can claim for input tax based on the below requisites:

-Input tax recovery is not permitted for VAT paid on non-recoverable input tax such as, entertainment services, motor vehicles which are available for personal use, etc.
-The applicant is not eligible to claim VAT incurred in connection with undertaking activities as a tour operator (Non-resident tour operator).
-The foreign business cannot claim a refund if the business makes a taxable supply in UAE. (Other than the treatment of RCM).
-The foreign business is from a country in similar circumstances that provide tax refunds to UAE entities. (The approved countries with reciprocal arrangement with UAE Ministry of Finance (MOF) is mentioned at the end).
-The business should not have a fixed establishment and not carrying any business in UAE and is not a taxable person in the UAE.
-They are carrying on the business and are registered as an establishment with a competent authority in the jurisdiction in which country they are established.

Basic understanding

– Refund request period: 12 Calendar months
– Amount of Refund: The minimum claim should be 2000 AED
– Business visitor: Should be from an approved list of countries with reciprocal arrangements mentioned below.

Procedure to Refund VAT for Business Visitors in UAE

1. Sign Up with FTA portal.
2. Add company details in the registered mail id portal.
3. Submit the refund form.
4. All documents required for refund as discussed above should be sent to The Federal Tax Authority the document should reach within one month from refund request submission.
5. The refund form will be processed within 4 months by the FTA
6. Once the request is approved, the refund is expected to issue within 10 working days.

Read More.

Can my company claim back VAT for the cost of health insurance?

From the inception of VAT in the UAE it was somewhat unclear if employers could reclaim the tax charged on health insurance costs for employee families as well as direct employees. Many believed that if this was a company wide policy and included employee contracts, then they had fully met the requirements under Article 53 of the Executive Regulations. In September, the Federal Tax Authority issued a very helpful guide that clarified the position. This can found on the FTA’s website https://www.tax.gov.ae under the Getting Help Menu.

The VAT law mentions two circumstances where an employer is able to reclaim VAT on employee benefits. The first criteria is where there is a legal obligation to provide such benefits. Interestingly, in Abu Dhabi it is already a legal requirement for employers to provide health insurance benefits to employees and their families, so all input VAT may be recovered. Conversely in Dubai where there is no legal requirement to extend health insurance to an employee’s family, there is no automatic right to recover it.

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