Al Marzaan Consultancy is your trusted partner for VAT refund services in the UAE catering to both businesses and tourists seeking swift VAT refunds. This service becomes relevant when your input VAT is greater than your output VAT. To clarify, the output tax pertains to the tax imposed on a business’s sales, while the input tax is the tax collected on a business’s purchases, expenses, and imports.
How to claim VAT Refund for Exports in UAE
The golden rule that applies to VAT refund for exports is that exporters can only submit a claim for products and/or services that are used exclusively and wholly for their respective businesses. This means computers, equipment, supplies, transportation, and services like accounting and bookkeeping all count if they’re used solely for business purposes.
If there are expenditures that were partially for personal usage like a personal vehicle that’s also used by the business, a portion of the VAT can be claimed, which is equal to the exact amount that’s used by the business.
What can I claim for a VAT refund as an exporter in UAE?
The advantage of exporters in UAE registering for VAT is they’re able to utilize their first VAT return in claiming back the VAT costs that their businesses incurred previously. They may only get one opportunity in claiming back previous costs and there are limits as well. For all other VAT chargers exporters incur in the span of doing business and being registered for VAT in UAE, they may be able to claim back taxes.
- Capital and inventory expenses – exporters can claim back tax for all company capital expenses including equipment, laptops purchased within the past six months before VAT registration date, and inventory. Goods must be owned and utilized by a company at the present moment. They may also have been used in making new products that are still owned and utilized by the business.
- Professional services – a business that exports goods and/or services outside of UAE can claim back tax on professional services such as legal and accounting services which the business purchased, including from the past six months starting from VAT registration date.
How to Claim VAT on Exported Goods
Any taxable business can claim a Dubai VAT refund in its VAT return filing in UAE with the Federal Tax Authority (FTA). The VAT return filing is carried out regularly and usually within twenty-eight days for the end of a tax period. Tax period refers to the period of time in which payable tax is calculated and paid. The standard tax period for exporters in UAE is:
- Quarterly for an export business with a yearly turnover below AED 150 Million
- Monthly for an export business with a yearly turnover of AED 150 Million or above
The local tax authority, at its discretion, can assign a specific business a distinct tax period. Failure in filing a tax return during the authority’s specified time frame is going to be considered a violation and the violator will be liable for paying fines in accordance to provisions of UAE.
What information is required for claiming back VAT in UAE?
The UAE Federal Tax Authority will require a business to supply the following information on the UAE VAT refund application form:
- Tax Registration Number or TRN – a TRN is a unique set of numbers issued to a VAT-registered business in the UAE. It is advisable to verify whether or not the correct TRN has been listed.
- Excess Refundable Tax Total Amount in AED – the formula in getting the total amount in AED for the excess refundable tax is Refunds – Penalties = the Excess Refundable Tax. Include refunds that are reported in previously submitted tax returns, as well as all administrative penalties except for late registration penalty.
- The amount for Refund in UAE – this is the amount that you want to have refunded. The amount that you enter has to be equal to or less than the amount in the Excess Refundable Tax Total Amount in the AED section.
- Eligible Excess Refundable VAT Remaining Amount in AED – state the amount of the refundable tax you’re able to apply for in the following VAT returns.
- Amount of penalty for late registration – this is where you add the penalties that are imposed on your business, and state whether or not you’ve settled the amount of penalty. If you’re free from any fine or penalty, this section can display zero (0) AED. If you’ve been charged with a penalty that you have already paid, then also write zero (0) AED. If you’ve been charged with a penalty; however, you are yet to settle the amount during the time of submitting this VAT refund application, state the penalty amount.
- Declaration and authorized signatory – make sure that you read and fully understand the declaration prior to saying yes in the application for a VAT refund.
