Getting your money back from the UAE tax authority
The UAE has been considered a tax haven for many individuals and businesses, particularly due to its favourable tax regime. Aside from imposing no tax on personal income and personal assets, it only applies a 5% VAT on goods and services, and as low as 9% corporate tax—one of the lowest rates across the world! This is the reason why numerous entrepreneurs, the wealthy or high net worth individuals are drawn to this country. The government is keen to make doing business and living or retiring here as favourable as possible.
In addition, the government also allows easier ways to get VAT refunds for various types of entities, individuals, and organizations—giving them financial relief and attracting them further to invest in and set up a home in the country.
But how exactly do their VAT schemes usually work? We have laid out for you the different types of VAT refunds that exist in the UAE to help you understand how these regimes work.
VAT Refund for Taxable Persons in the UAE
It is obligatory for taxable persons—whether a business, sole trader, or a professional carrying out any economic activity in the country—to file returns at the end of each tax period. Aside from being compliant to the laws and regulations, this also allows them to apply for VAT refund whenever they have a VAT credit. This is provided that the input tax is greater than output tax on a VAT return.
According to the Federal Tax Authority, here are the steps to claim for VAT Refund:
- Login to the FTA e-Services Portal
- Initiate the form: go to the ‘VAT Tab‘ and then go to ‘VAT Refunds’ tab. Click on
- ‘VAT Refund Request’ to access the form
- Fill in details in your Refund Form. Ensure that the information is correct.
- Click ‘Submit’ button. Once your claim is approved, the amount will be returned within 5 business days.
- Confirm your balance after the approval
VAT Refund for Business Visitors
This specific Refund Scheme helps business visitors make a claim for refund of VAT settled on the products or services purchased in or from the UAE. The period of each refund claim is 12 months (hence at the earliest after the end of each year). The minimum amount of each refund claim to be submitted will AED 2,000.
Criteria for VAT Refund
- They have no place of establishment in the UAE
- They are not a taxable person in the UAE
- They are registered as an establishment in the jurisdiction where it is established
- They are from a country that provides refunds of VAT to UAE entities in similar
- circumstances (reciprocity!)
- A hard copy, original tax compliance certificate in Arabic or English, attested by the UAE embassy in the country of registration
- Tax invoices
- A self-declaration in Arabic or English if the applicant undertakes exempt/non-business activities at home
- Passport copy of Authorized Signatory
- Proof of Authority of the Authorized Signatory
VAT refund for Tourists
Even the tourists and visitors can enjoy the UAE’s favorable tax refund scheme. These individuals can get VAT refund for their travel purchases in the UAE, through a special device placed at their departure port (airports, seaports, or border ports). They just need to submit the required documents and they can recover VAT from 4,000 participating retail outlets across the UAE.
Criteria for VAT refund
According to the Federal Tax Authority, for a tourist to claim VAT refund on purchases he made in the UAE, he must fulfill certain conditions:
- Goods must be purchased from a retailer who is participating in the ‘Tax Refund for Tourists Scheme’
- Goods are not excluded from the Refund Scheme of the Federal Tax Authority
- He must have the explicit intention to leave the UAE in 90 days from the date of supply, along with the purchased supplies
- He must export the purchased goods out of the UAE within three months from the date of supply
- The process of purchase and export of goods must be carried out according to the requirements and procedures determined by Federal Tax Authority.
- Tax-free tags
- Relevant tax invoices.
- Boarding pass for air or sea departures
- Original valid passport or national ID card
VAT Refund for Exhibitions and Conferences
With the aim of enhancing the country’s status as a hub for Meetings, Incentives, Conferences & Exhibitions (MICE), the UAE has allowed businesses or suppliers involved in the industry of exhibitions and conferences to also claim for refund of the VAT charged to their global customers. The scheme is made to guarantee ease of doing business, and to take the burden of tax costs from international customers.
- The Supplier grants either the right to attend or occupy space
- The Supplier is VAT Registered and has a place of residence in the UAE
- If Supplier is from overseas, they must provide proof of establishment in an overseas jurisdiction.
- The Recipient does not have a place of Establishment or Fixed Establishment in the UAE
- The Recipient is not VAT registered in UAE
- The Recipient presents written declaration that it has not paid the amount of VAT to the Supplier
VAT Refund for UAE Nationals on New Residences
To provide UAE Nationals monetary relief from building a new residence in the UAE, the government has introduced a refund scheme on VAT incurred on their construction costs.
- Natural person who is a UAE National
- Must have supporting documentation such as family book
- Expenses must be related exclusively to the applicant’s new residential construction.
- Copy of Family Book.
- Copy of Emirates ID.
- Document to prove building is occupied (e.g., water and electricity delivery bill).
- Construction contract and completion certificate
- Refund Form sent to the FTA within 12 months from building’s date of completion
VAT Refund on Charities in the UAE
This VAT refund scheme, amended according to the Capital Assets Scheme, allows certain charities to recover all input tax they paid on their services and supplies. These organizations often create a blend of supplies of products and services where VAT law differ, so if such goods are supplied for a charge, FTA shall deem it as a business activity.
However, tax paid for goods used for making exempt supplies (products or services where the supplier is prohibited from charging VAT), are excluded from this recovery.
- The Charity is on the list of the UAE’s designated Charity
- The Charity is considered a taxable person
- The costs related to the activity are liable to VAT
- Relevant goods or services were not received free of charge
- For donation concerns, charities must comply with the guidelines issued by the UAE Central bank on Anti-Money laundering and combating the Financing of Terrorism and Illegal organizations
VAT Refund for Mosque construction and operation
The Federal Tax Authority (FTA) in October launched an easier mechanism for the refund of VAT incurred on building and operating mosques. The mechanism includes refunding VAT incurred on mosques on FTA’s e-Services portal, which was formed as a result of the Cabinet Decision No. (82) of 2022 in a bid to offer financial help to mosques—considered the most important place of worship for the progressive Arab nation.
Criteria for VAT refund
- Complete payment of input tax on services and products connected to the construction of the mosque
- Proof that competent authorities approved the construction
- Mosque Operation Commencement Certificate
- Meeting any of the following conditions:
- The Mosque has been handed over or is intended to be handed over by the Donor to any other Person for whom the Competent Authority has approved the handover of the Mosque to, including the Competent Authority itself, unless the handover is a Taxable Supply
- The Mosque is operated by the Donor as per the approval obtained from the Competent Authority.
- Emirates ID or passport
- Mosque Operation Commencement Certificate copy
- Bank account confirmation letter/certificate
- Schedule of expenses incurred for operating the mosque
- Copy of the five highest value tax invoices.