There are four conditions that must be fulfilled for foreign businesses to recover VAT in the UAE
The UAE’s Federal Tax Authority (FTA) has outlined four conditions that allow foreign businesses to recover value-added tax in the UAE, it announced on Saturday.
In a new guideline posted on its website, the FTA noted that the first condition is that foreign businesses must not have a permanent, fixed establishment in the UAE or any other VAT-implementing GCC states.
The second guidelines is that the foreign businesses must not be taxable in the UAE. Additionally, they must also be registered with the authorities in the jurisdiction in which they are established.
The last condition is that the foreign businesses must be from a country that implements VAT and provides VAT refunds to UAE businesses operating in similar circumstances there.
According to the FTA, the period of each refund shall be a calendar, meaning that the refunds applications for the 2018 calendar year can be made as of April 1, 2019.
For subsequent calendar years, the opening date for accepting refund applications will be March 1.
In a statement, the FTA noted that the minimum VAT refund claim submitted by business visitors is AED 2,000, which can consist of a single or multiple purchases. Along with the refund applications, visitors are required to submit the original tax invoices.
Businesses residing in GCC states that are not currently implementing VAT may submit a VAT refund application to reclaim VAT incurred in the UAE, unless they are foreign businesses obliged to account for VAT under the reverse charge mechanism.
VAT refunds can also not be proceed if the if the input tax is “blocked” for recovery, or if the foreign business is a non-resident tour operator.