UAE VAT Refund for Business Visitors
A foreign business entity registered and established outside the UAE with the competent authority in their country can claim a VAT refund for the expenses incurred in the UAE. The following foreign businesses/business visitors are eligible for VAT refund:
- The entity without place of establishment or fixed establishment in the UAE.
- The entity is not a taxable person in the UAE.
- The entity is not carrying on business in the UAE.
- The entity is carrying on a business and is registered as an establishment with a competent authority in the jurisdiction in which it is established.
The foreign company must have an agreement with the UAE Ministry of Finance to be included in the approved category of business visitors. The UAE Ministry of Finance (MoF) has published a list of countries with reciprocal agreements, which can be accessed in the "Approved List of Countries with Reciprocal Agreements for Business Visitors VAT Refunds" on the FTA’s website.
As per UAE VAT Decree-Law, only those companies that are listed in the approved category will be eligible for getting the business visitor’s refund.
If the foreign company is not listed in the approved category, they must inform their Ministry of Finance, and the authority will directly contact the UAE ministry for adding their name in the list. The VAT refund will be allowed only for those expenses incurred after the effective date of the agreement between UAE and foreign country.
The Refund for Business Visitors guide VATGRB1 issued by the Federal Tax Authority on April 2021 provides clarification on Refund for Business Visitors and details about the eligibility to apply for a refund and the application process.
How to Apply and When to Apply
To reduce the administrative burden of submitting the refund application one by one, a period of 12 calendar months is fixed by the FTA. The minimum amount of VAT claim to be submitted should be AED 2,000. The period of each refund application shall be a calendar year. The refund applications are accepted from the 1st of March till the 31st of August of each year.
Example:
When a business visitor has incurred expenses for the calendar year 2023, the opening date for submitting the VAT refund application starts from 1st March 2024 and the last date of submitting the application shall be 31st August 2024.
The above-mentioned condition is not applicable for businesses established in any GCC states which is not an implementing state.
Conclusion
The UAE VAT refund scheme for business visitors is a strategic initiative by the Federal Tax Authority to attract more foreign investment by mitigating the tax burden associated with business activities in the UAE. Understanding and utilizing this scheme can significantly benefit eligible foreign businesses, making economic engagements in the UAE more viable and lucrative.
This comprehensive overview ensures that foreign business visitors can effectively manage their VAT obligations while maximizing potential tax recoveries during their commercial engagements in the UAE.
