VAT Refund in Dubai – A Concise Guide
In Dubai and the rest of the UAE, each taxable person must file a VAT return, to sum up the VAT in the taxation period. Whenever the input tax is more than the output tax on a VAT return, the person is eligible to file a VAT return after submitting the return or sometime later than that.
VAT is a consumption tax that is applied to goods and services across Dubai. It is an indirect tax in which the business takes VAT from the buyer and gives it to the government. Subsequently, it gets a refund from the government on the tax paid to suppliers. These rebates are subject to the following terms and conditions by the Federal Tax Authority (FTA). Claiming a VAT refund could get a little complicated since it is accessible only to a certain %. That is where an experienced VAT consultant could be of great help.
This read attempts to go through the details of the VAT refund and the process of obtaining it.
VAT Refund – An Overview
Input VAT indicates the amount to be paid to the supplier towards purchases/expenses. Output VAT indicates the amount that is collected on Sales. Once all registered businesses file their VAT return in which they mention details of their sales, input VAT and output VAT, it could either lead to VAT Payable (if output is greater than input VAT, the balance will have to be given to FTA) or VAT Refundable (if output is less than input VAT, the balance will be refunded to the business). Also, taxable persons can request for a VAT refund whenever there is a credit.
Once the taxpayer submits the refund application, the FTA takes up to 20 working days of an application being submitted, reviews the same and then processes the same. The FTA sends its decision of accepting or rejecting the request to the taxpayer. In case they need a greater number of days, the taxpayer will be intimated of it through a notification.
Some of the important fields in the VAT refund application form are Tax Registration number/legal name of entity, total amount of excess refundable tax in AED, amount you want to get as refund in AED, remaining amount of eligible excess refundable tax, late registration penalty charges in AED, if applicable, authorized signatory and declaration. For the late penalty charges field, if there is no penalty involved or if it is already paid, the field will be marked as 0. But if you have been charged a penalty but you haven’t paid it yet, the amount will keep reflecting in that field, till it is paid.
Expenses That Fall Under the Category of VAT Refund
There are certain business heads that fall under the category of VAT refund and qualify for the same, of course with some exceptions that apply:
- Foreign business owners for goods and services used for business/personal use
- Meals and accommodation
- Fuel and car rentals
- Tourists who have made purchases
Two Ways to Treat Refundable VAT in Dubai
The VAT refundable can be refunded to the taxpayer in two ways:
- The taxpayer can request for a VAT refund in case his input VAT is higher than the output VAT
- The taxpayer can request to carry forward his recoverable tax to the upcoming tax schedules and can be settled against the payable tax then.
Claiming VAT Refund in Dubai – The Process
For claiming VAT refund in Dubai, the taxpayer must apply within a year at least and go by the below mentioned steps and follow the process, for a smooth execution:
- Account Creation – The taxpayer must log into and create an account on FTA’s e-services portal and sign in, with appropriate user details (username and password).
- Form Access – The user must click on the VAT tab after which comes the VAT Refunds tab, through which the form of VAT Refund Request can be availed
- Form Filling – There will be a form will pop up with some fields filled in, based on your user log in. The taxpayer must fill in all necessary fields with accurate information, authorized signatory and submit the application. There will be some fields that will be mandatory marked with an ‘*’ sign.
- Email Receipt – On submitting the application through the ‘Submit’ button, there will be an email received from the FTA showing the result of your application. If it is approved, the refund will be processed in the next 5 working days.
- Check Status – You can even check your refund status by going to the ‘My Payment’ tab under the ‘Transaction History’ section in the eServices section.
Some significant things to remember for VAT Refund are:
- Prior to submission of the refund claim, make sure that the accurate bank details are mentioned on the main registration form
- Those refund request forms that do not have the correct bank details will not be accepted
- There must be an authorized and valid bank account validation certificate that must be given to the FTA. It must include details like the account holder name, bank name and address, SWIFT code, and other details.
- If the associated bank is internationally marked and does not have a respective bank in Dubai, the refund procedure may take a little longer than 5 working days along with transfer fees charged by the bank.
Summing It Up
Dubai has been one of the most sought-after destinations for doing any kind of business and people from world over are attracted to do the same. Thanks to the flexible and easy policies of the government, most processes are simple to execute. VAT refund services in Dubai is a systematic yet confusing process. Sometimes, calculation of taxes and other components, based on our criteria is confusing. And that is where taking proper guidance of a tax consultant or expert can make things much smoother and effective.
We @ Horizon Biz Consultancy have been offering a variety of accounting and financial services since over 6 decades. VAT is one of our primary forte. We have a spread-out clientele for whom we have been offering services related to regular VAT calculation, filing returns, excise tax solutions for avoiding unnecessary tax payment or penalty.
You can depend on us if you are looking for skilled VAT consultants. Contact us for helping you calculate and file your VAT and processes thereon.