The Federal Tax Authority trn verification in the UAE has implemented a plan that enables overseas enterprises to get refunds on VAT paid for expenditures made in the UAE. This scheme is similar to the VAT return uae refund system present in the European Union.
The business VAT Registration refund scheme enables foreign companies to reclaim VAT paid on costs incurred in the UAE, if certain prerequisites are fulfilled.
A foreign business refers to any enterprise registered with the relevant body where it is founded.
Foreign companies can request VAT Registration uae refunds under this scheme in these circumstances:
a. The firm is located in a GCC nation without VAT dubai
An enterprise situated in a GCC country without VAT can utilize this refund scheme. Presently, only the UAE and Saudi Arabia have applied VAT Registration in the GCC. Hence, companies in other GCC countries qualify for this scheme.
b. It is an overseas business outside the GCC fulfilling these criteria:
Registered as an establishment by the relevant authority where it is founded
Does not have a place of establishment or permanent establishment in the UAE or any other VAT-implementing country
Is not a taxable person under UAE VAT
Belongs to a country providing VAT Registration refunds to UAE entities in similar circumstances
Note: The tax invoice claimed cannot be for goods/services where input tax is irrecoverable. Certain supplies in the UAE do not allow input tax recovery. Foreign companies should ensure claimed tax does not relate to such supplies.
Foreign tour operators cannot claim tax refunds under this scheme.
So this VAT dubai refund scheme is beneficial for foreign companies visiting the UAE. The framework is laid out but not implemented yet. The exact refund process details will be shared later.