VAT Return Review and Refund Application in UAE

What is a VAT Return in UAE?

A VAT return is an official document to be completed by the Taxable Person and submitted to the Federal Tax Authority (“FTA”) at regular intervals detailing any output tax due and input tax recoverable and including any other information that is required to be provided.

All VAT Returns should be submitted online using the FTA portal. The return can be submitted by the Taxable Person, or another person who has the right to do so on the Taxable Person’s behalf (for example, a Tax Agent or a Legal Representative).

The VAT Return must be received by the FTA no later than the 28th day following the end of the Tax Period concerned or by such other date as directed by the FTA. Where a payment is due to the FTA, it must be received by the FTA by the same deadline.

If there is no business transaction for the Tax Period, you are required to submit a “nil” VAT Return by the respective due date.

What is the benefit of conducting review of Historical (Past) Returns?

Tax returns filed by the registrant is the basis of any scrutiny or evaluation for FTA. Review of returns already filed (historical returns) will identify any anomalies and subsequent corrective actions required to rectify the errors or omissions. Anomalies can include reporting of standard-rated sales as zero-rated sales, Service RCM not recorded accurately, Adjustments to RCM goods and services not made properly, the Wrong claim of input tax, RCM reversals not taken accurately.

Corrective actions can include a voluntary disclosure submission or correction in the subsequent return. Review of past returns will ensure that all returns filed are as per UAE VAT rules and chances of any penalty are nil.

What is a VAT Refund Application?

Every Taxable Person is required to file a VAT return summarizing the VAT due to the FTA for the tax period. When the input tax is greater than output tax on a VAT return, the Taxable Person is able to request a VAT refund in UAE after submission of the VAT return or at any later time when there is a credit owed to them.

Where the Taxable Person makes a claim for a refund of excess refundable tax, the FTA will within 20 business days of an application being submitted, review the application and notify the Taxable Person of its decision to accept or reject the refund claim. The FTA may notify the applicant that it requires a longer period than (20) business days to consider the application where appropriate.

Tax authorities scrutinize the refund application with strict criteria. The refund application has to be submitted incorrect format as prescribed by FTA.

The tax professionals at HLB HAMT shall assist you to file VAT refund applications on a timely basis incorrect format, suggest corrective action to rectify any discrepancy which can expedite the refund process and respond to FTA queries related to the refund application. Timely and accurate refund application with sufficient document submission will result in timely refund process thereby causing positive cash flow and smooth business operations.

VAT Refund for UAE nationals building new residences

HLB HAMT has a dedicated desk of professionals with Arabic proficiency who can assist in refund application of UAE Nationals for claiming input tax pertaining to New Residence constructed in UAE.

The tax team at HLB HAMT will ensure that all the necessary documents are arranged and compiled to submit the refund application with FTA or the Verification body, to get the refund application approved on timely basis.

Who is eligible for VAT Refund in UAE?

Subject to Article 66 of the Executive Regulation, where a UAE National who is a national of the UAE and holds a Family Book, owns or acquires land in the UAE on which he/she builds or commissions the construction of his / her own residence, he/she is entitled to request a special refund from the FTA for the VAT incurred on certain expenses related to the construction of a new residence.

What is the Process?

• A New Residence VAT Refund Request should be submitted to the FTA on the FTA e-Services portal.
• The application will be reviewed by the FTA to check the eligibility of the applicant to make the claim and if the initial assessment is successful a reference number will be provided if additional documents/information are requested or the application may be rejected.
• If the initial assessment is successful, additional documentation will be requested, either by the FTA or by a Verification Body (appointed and authorized by the FTA)
• Once the application is reviewed by the Verification Body, it will inform the FTA of the outcomes of verification. Following this, the FTA will notify the applicant if the refund claim is approved, amended or rejected.

VAT Refund for EXPO 2020 participants

Who is eligible to claim Refund?

Offices of the Official Participants of Expo 2020 Dubai are eligible to recover VAT on certain Goods and Services which were imported or acquired.

• Where the Official Participant is not registered for UAE VAT, the refund applications can be made through the Bureau (Bureau Expo 2020 Dubai established by virtue of Decree No. 30 of 2014 issued by the Ruler of Dubai) by submitting a special refund application to the Bureau.
• Where the Official Participant is registered for VAT, it may reclaim VAT via its UAE VAT return.

What VAT is Reclaimable?

Offices of the Official Participants are able to reclaim VAT incurred on the import and acquisition of the following five categories of Goods or Services without the need to use them for making taxable supplies:

• VAT incurred in direct connection with the construction, installation, alteration, decoration and dismantlement of their exhibition space
• VAT incurred in direct connection with the works and activities of organizing and operating the Official Participant’s exhibition space and any presentations and events within the Expo 2020 site.
• VAT incurred relating to the actual operations of the Official Participant, provided that the value of each Good or Service for which the Office of the Official Participant makes a claim is not less than AED 200
• VAT incurred with all operations, services and activities provided for the purpose of participation in Expo 2020 Dubai, whether located within or outside the boundaries of the Expo 2020 Dubai site
• VAT incurred on import of Goods for personal use of the Official Participant’s Section Commissioner-General, Section Staff and the Beneficiaries.