Foreign VAT Claim in UAE

The introduction of VAT was a major milestone in the economy of UAE. After decades of tax-free living, the government decided to levy 5 percent VAT, effective from January 1st, 2018.

However, foreign businesses are provided with the option to recover Value Added Tax (VAT) incurred in the UAE. The Federal Tax Authority has defined four conditions that makes you eligible for the recovery. The conditions are that the foreign businesses;

Should not hold any place of establishment in the country or in any of the VAT-implementing GCC states
Should not be a taxable person in the UAE

Should be listed as an establishment with a competent authority in the jurisdiction in which they are established

Must belong to a nation that implements VAT and provides refunds to UAE businesses

VAT cannot be reclaimed in situations such as;

Foreign businesses making supplies in the UAE(exceptions include when the recipient accounts for VAT under the reverse charge mechanism)
The input tax getting blocked from recovery and not recoverable by a taxable person in the UAE

The foreign asset being a non-resident tour operator

The period of each refund claim shall be a calendar year and refund applications for 2018 can be made on April 1, 2019. For the subsequent calendar years, the refund claim can be made on March 1st of the following year.

Dhs2,000 should be the minimum claim amount of each VAT refund application, which can be the one made on a single or multiple purchases.  The original tax invoices will have to be submitted along with the refund applications. Hence applicants need to ensure that they retain the original tax invoices.