A Comprehensive Guide to Special VAT Refund Schemes in the UAE

Since the introduction of VAT in the UAE in 2018, the government has introduced various refund schemes for the benefit of specific persons. Eligible persons are allowed to claim a refund of VAT paid on purchases made in the UAE, even if they are not taxable persons in the UAE. Some of the VAT refund schemes can be leveraged by foreign tourists and businesses visiting the UAE. Apart from that certain schemes are aimed at specific groups such as the UAE nationals and foreign governments & organisations.

However, the Federal Tax Authority (FTA) has set out certain conditions for the entities to avail of these schemes. Understanding the terms and conditions of the scheme can be challenging for applicants but consulting with tax agents in Dubai will simplify the process. Here is a list of special VAT refund schemes in the UAE:

1. New residences constructed by UAE Nationals

This scheme applies to UAE nationals who own or acquire land in the UAE and construct their residences. Such persons can apply for a special refund from the FTA for VAT incurred on certain expenses related to the construction of a new residence. As per the FTA’s guidance on the VAT refund scheme for residences, only a UAE National who is a natural person can apply for the scheme.

It means corporate entities are not eligible to apply for the VAT Refund scheme for New Residences constructed by UAE Nationals. The term residence as per the scheme means any building (including townhouses & villas) used as a private home for a natural person (UAE national). The residence can also be fixtures and fittings belonging thereto and enjoyed therewith, which comprise at least cooking and washroom/bathroom facilities in addition to sleeping quarters.

2. VAT Refund Business visitors

Foreign businesses can claim a refund of VAT paid on expenses incurred in the UAE. The VAT refund scheme for business visitors applies to foreign businesses from a country that allows VAT refunds to the UAE entities. Tax agents in Dubai can guide business visitors on how to avail of the VAT refund scheme. Foreign businesses must meet the following conditions to apply for a VAT refund:

• The foreign entity shouldn’t have a place of establishment or fixed establishment in the UAE or any GCC country where VAT is implemented
• The applicant should not be a taxable person in the UAE
• The foreign entity should not conduct any business activity in the UAE
• The foreign business should be registered as an establishment with a competent authority in the country of establishment

3. VAT Refund for Tourists                

Individuals visiting the UAE are allowed to claim a refund on the VAT paid on the expenses they incurred in the country. However, the scheme applies to tourists who are not residents in any of the GCC countries that have implemented VAT. Eligible tourists can claim a refund of the VAT paid on the purchase made while visiting the UAE. The following conditions must be met to be eligible for the scheme:

• Tourists must leave the UAE within 90 days of making the purchase
• The tourist must not be a crew member on a flight or aircraft leaving a VAT implemented state

4. Foreign governments, diplomatic bodies, and international organizations

This scheme applies to foreign governments, diplomatic bodies and international organisations. VAT incurred by such persons on purchases made from the UAE can be reclaimed. The refund process can be made easier by seeking advice from tax agents in Dubai. However, the following conditions have to be met to be eligible for the scheme:

• The goods and services purchased should be for official use only
• The country of the organisation or government should have implemented a similar tax refund scheme and must exclude similar entities from the UAE from any tax

VAT Consultancy Services offered by Jitendra Chartered Accountants

The UAE has introduced several VAT schemes for foreigners and UAE nationals to refund the VAT paid on the purchases made in the country. Understanding the conditions and requirements associated with each of these schemes is a challenging process. However, tax agents in Dubai such as Jitendra Chartered Accountants (JCA) can advise the applicants on how to claim a refund on the VAT paid on their expenses.

JCA has a qualified team of tax consultants who can help businesses to ensure VAT compliance in the UAE. Apart from VAT refund schemes, we can help businesses to comply with requirements such as VAT accounting, VAT return filing, VAT registration, VAT penalty services, VAT deregistration etc. JCA has a tax agent who is registered with and approved by the FTA. Our tax agent in the UAE can help businesses to resolve any tax-related matters by providing robust VAT advisory services.