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The Federal Tax Authority (FTA) in Dubai mandates that every business operating within the UAE must file their Value Added Tax (VAT). Additionally, provisions exist for claiming a VAT refund when the input tax exceeds the output tax on a VAT return. To request and claim a VAT refund in the UAE, you need to log in to EmaraTax, request a VAT refund form, fill in the details, and submit the required documents. This blog post will provide an overview of VAT refunds, instructions on how to file for a VAT refund, and information on the timelines for refunds in Dubai.
What is VAT Refund?
A VAT refund is a reimbursement process where businesses can reclaim the Value Added Tax (VAT) they have paid on purchases and expenses when the input tax (the VAT paid on purchases) exceeds the output tax (the VAT collected on sales) during a specific tax period.
This ensures that businesses are not unduly burdened by the tax and only pay the net amount due. In the UAE, businesses can apply for a VAT refund through the EmaraTax portal by submitting a VAT refund form along with the required documentation.
Why Should You Claim A VAT Refund?
Claiming a VAT refund is crucial for your business for several reasons. Firstly, it significantly aids in cash flow management. Reclaiming the VAT you’ve paid on business expenses means more liquidity in your accounts. This is especially important for businesses with high operating costs, as having more cash on hand allows you to cover daily operations and make necessary investments without financial strain. Improved cash flow can help you avoid taking on debt and ensure that your business runs smoothly.
Secondly, claiming a VAT refund enhances cost efficiency. By reclaiming the VAT on your purchases, you effectively lower your overall tax burden. This reduction in costs can be passed on to your customers through competitive pricing or can be reinvested into the business to drive profitability.
Another important reason to claim a VAT refund is to ensure compliance with tax regulations. Regularly filing for VAT refunds helps keep your tax records accurate and up-to-date. This compliance is vital to avoid penalties, fines, or legal issues that could arise from non-compliance or incorrect tax filings. Staying compliant not only protects your business from financial risks but also builds a trustworthy reputation with tax authorities and other stakeholders.
Lastly, the additional funds received from VAT refunds can be directed towards investment opportunities. Whether it’s expanding your business, innovating new products or services, or enhancing existing ones, having extra funds can provide a significant boost. These investments can help you grow your business, stay competitive, and explore new markets. In summary, claiming a VAT refund not only improves your immediate financial situation but also supports long-term strategic growth and stability.
Who is Eligible For VAT Refund in Dubai?
In Dubai, businesses and tourists are eligible for VAT (Value Added Tax) refunds under certain conditions:
Tourists: Visitors to the UAE who are not residents can claim VAT refunds on goods purchased from registered retailers who participate in the Tax Refund for Tourists Scheme (TRS). The goods must be purchased within the UAE and exported out of the country within 90 days from the date of purchase.
Businesses: Registered businesses that incur VAT on their expenses can claim refunds for the VAT they have paid on eligible purchases, provided these purchases are used for business purposes and are directly related to making taxable supplies.
To claim a VAT refund, specific documentation and processes need to be followed, typically involving obtaining a Tax Free Shopping form from the retailer, validation of the form at the airport before departure, and submission to a refund booth or office.
What is the Timeline For VAT Refund in Dubai?
The timeline for VAT refunds in Dubai involves several steps, each with its own timeframe. Once you submit a VAT refund application through the EmaraTax portal, the Federal Tax Authority (FTA) will review your request. Typically, the FTA aims to process refund claims within 20 business days.
During this review period, the FTA may request additional information or documentation to support your claim. If additional information is required, the processing time may be extended accordingly, depending on how quickly you can provide the requested details.
After the FTA completes its review and approves the refund, the amount is generally credited to your registered bank account within a few days. However, it is important to note that the entire process can take longer if there are any discrepancies or if the FTA requires further verification of your application.
Overall, while the FTA strives to process VAT refund claims within 20 business days, the actual time to receive your refund may vary based on the completeness of your application and any additional information that may be needed. It is advisable to ensure all documentation is accurate and complete when submitting your claim to facilitate a smoother and faster refund process.
How to Request for VAT Refund Online?
To request a VAT refund online in the UAE, follow these detailed steps to ensure a smooth and accurate submission through the EmaraTax platform:
Step 1: Log into EmaraTax:
Start by logging into your EmaraTax account using your credentials or UAE Pass. If you don’t already have an account, you can create one by selecting the signup button and following the registration process. Once logged in, you will be directed to your User Dashboard, where you can access various tax-related services.
Step 2: Initiate the VAT Refund Request:
This step involves starting a new VAT refund request within the EmaraTax system. You will need to navigate through several options to correctly set up your refund application.
Select “Taxable Person” as your user type and click “Proceed.” This will take you to the Home page where you can manage your tax affairs.
In the left sidebar, locate and select the VAT Module. This module contains all the tools and options related to VAT management.
Click “New” to create a new VAT refund request. If you have made previous requests, they will be displayed here for your reference.
Initiate a new refund request by clicking “New Refund Request.” Follow the on-screen instructions to proceed.
Confirm that you have read and understood the terms and conditions presented. Click “Next” to continue to the next stage of the request.
Click “Start” to begin entering the details for your refund request.
Step 3: Fill in the Required Details:
At this stage, you will need to provide detailed information and documentation to support your VAT refund request. Ensuring accuracy and completeness is crucial to avoid delays. The key information required include:
Bank Details: Verify that your bank details are correct. This includes the account holder’s name, bank name, address, SWIFT/BIC code, and IBAN. Ensure that these details match those registered with the FTA.
Supporting Documents: Upload all necessary supporting documents. These may include a bank validation letter, proof of payment for VAT, and any other relevant documentation that supports your refund claim.
Transaction Details: Enter the amount of the refund you are claiming. This should be within the “Excess Refundable VAT Amount” as calculated. Provide detailed transaction information, including the nature of the transactions and the VAT involved. Use the provided template to fill in this information accurately and upload it to the system.
Additional Information: Complete any additional required fields, such as contact information and details of VAT supplies. Ensure all information provided is accurate and complete.
Step 4: Review and Submit:
Before submitting your refund request, carefully review all the information you have entered. This step is essential to ensure that there are no errors or omissions that could delay the processing of your refund.
Save your progress and review each section of the refund request thoroughly.
After reviewing all details, mark the checkbox to confirm that you agree to the terms and conditions.
Click the “Submit” button to finalize your request. It is important to note down the application number provided for future reference and tracking.
Step 5: Correspondence and Follow-Up:
Once you have submitted your request, you will receive an acknowledgment from the EmaraTax system. You will also receive notifications regarding the status of your application, including approval, rejection, or requests for additional information. These correspondences can be accessed and downloaded from the EmaraTax platform, allowing you to keep track of your refund application status.
By following these detailed steps, you can efficiently submit your VAT refund request to the Federal Tax Authority through the EmaraTax platform, ensuring that all necessary information and documents are accurately provided
VAT Refund Process for Tourists in Dubai
Tourists visiting Dubai are eligible for tax-free shopping and can benefit from a VAT refund on purchases made during their stay. The process has been streamlined and digitized, making it more convenient and efficient. Here’s a detailed guide on how to claim your VAT refund as a tourist in Dubai.
Eligibility for VAT Refund
To qualify for a VAT refund, you must be a tourist (non-resident) in the UAE, at least 18 years old, and departing from the UAE within 90 days of your purchase. Your purchases must be made from retailers participating in the Tourist Refund Scheme, with a minimum spend of AED 250 per receipt.
Key Steps in the VAT Refund Process
1. Shop at Participating Stores Make sure to shop at stores that are part of the Tourist Refund Scheme. These stores will provide you with a tax invoice and a tax-free tag or a digital QR code for your purchases. Keep all your receipts and tags safe, as they are necessary for the refund process.
2. Validate Your Purchases Before leaving the UAE, validate your tax-free purchases. You can do this at various locations:
Self-service kiosks: Available at airports, shopping malls, and hotels. These kiosks are convenient and typically require you to scan your passport or GCC national ID card along with your boarding pass, which should show your departure within the next 24 hours.
Manned validation desks: Located at exit points like airports and land borders, and typically require you to be departing within the next 6 hours. Here, you might also need to present the items you bought along with your tax-free tags, tax free transaction ID and original tax invoices if requested.
3. Choose Your Refund Method Once your purchases are validated, you can choose how you want to receive your refund:
Credit Card: The refund will be processed and credited to your card, typically within a few days.
WeChat: If you prefer, the refund can be transferred via WeChat.
Planet Tax Free: Planet Tax Free Tag offers tourists VAT refunds by providing Tax Free Shopping forms. Validate these forms at airport counters before departure to receive VAT refunds on eligible purchases.
Cash: Head to a currency exchange office at the airport or other designated locations to receive your refund in cash. Note that there is a maximum cash refund limit of AED 35,000.
Additional Considerations
Service Fees: A fee of AED 4.80 is charged for each tax-free tag, and there is a 13% reduction on the claimed VAT amount.
Exclusions: VAT refunds are not applicable for certain items such as motor vehicles, boats, aircraft, and goods that have been used or consumed in the UAE. Additionally, services and online purchases are also excluded from the refund scheme or tax free transactions in the UAE.
Estimated Time for Refund
The time taken to process your VAT refund can vary:
Self-service kiosks: Typically take around 3 minutes to process a refund request.
Manned desks: Approximately 5 minutes.
Credit Card Refunds: Usually credited within nine days.
Cash Refunds: Processed immediately at the currency exchange office, usually within a few minutes.
By following these steps, tourists can efficiently claim their VAT refunds and make the most out of their shopping experience in Dubai. This process not only saves time but also ensures that you get back a portion of what you spent on eligible purchases, making your trip more economical and enjoyable.
Documents Required to Claim VAT Refunds in UAE
To claim VAT refunds in the UAE, specifically for businesses in Dubai, the following documents are typically required:
VAT Registration Certificate: Proof that your business is registered for VAT in the UAE.
Tax Invoices: Original invoices showing VAT paid on eligible business expenses. These invoices must meet the requirements set by the Federal Tax Authority (FTA).
Proof of Payment: Bank statements or other documentation proving that the VAT on the invoices has been paid.
Import Documents (if applicable): Documentation showing VAT paid on imported goods, such as customs declarations.
Expense Records: Detailed records of business expenses, categorized and summarized to support the VAT refund claim.
VAT Return Forms: Completed VAT return forms for the relevant period, indicating the amount of VAT paid and the amount claimed for refund.
Supporting Documentation: Any additional documents required by the FTA to substantiate the claim, such as contracts, purchase orders, and receipts.
Tourists on the other hand need to provide the following documents to process their tax refund:
Tax Free Shopping Form (for Tourists): Provided by the retailer, it must be completed and signed by both the retailer and the tourist.
Original Purchase Receipts: These receipts or invoices should show that VAT was charged on the eligible purchases. Ensure these receipts are original and clearly detailed.
Passport and Boarding Pass (for Tourists): Required to validate your identity and evidence of departure from the UAE.
Ensuring all these documents are accurate and complete will facilitate a smooth VAT refund process for your business in Dubai.
VAT Refund Services in Dubai
VAT refund services in Dubai streamline the process for businesses to reclaim VAT paid on eligible expenses. These services assist with the preparation and submission of necessary documents, ensure compliance with Federal Tax Authority (FTA) requirements, and expedite the refund process. Utilizing VAT refund services can help businesses efficiently manage their finances and ensure they receive the refunds they are entitled to.
Tulpar Global Taxation can help businesses in Dubai process VAT refunds by providing expert guidance and support throughout the entire refund process. With their deep understanding of the Federal Tax Authority (FTA) requirements, they ensure accurate preparation and submission of all necessary documents. Tulpar Global Taxation also offers personalized consulting to identify all eligible expenses, helping businesses maximize their VAT refunds efficiently and compliantly. By leveraging their expertise, businesses can streamline the refund process, avoid common pitfalls, and focus on their core operations with confidence.
