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VAT REFUND FOR VAT

VAT REFUND FOR VAT-REGISTERED BUSINESSES IN THE UAE

As a VAT-registered business in the UAE, you have the right to claim VAT refunds on eligible business-related expenses. Whether you are a startup or a large enterprise, understanding how to handle VAT refunds is crucial to managing your finances efficiently and ensuring compliance with the UAE’s tax regulations.

What is VAT Refund for Businesses in the UAE?

In the UAE, businesses that are registered for Value Added Tax (VAT) can claim a refund on the VAT paid on eligible business-related purchases. This means that if your business incurs VAT costs on items used for your operations, you may be entitled to recover this VAT through the VAT return process.

Who Can Claim VAT Refunds in the UAE?

To qualify for VAT refunds in the UAE, your business must meet these criteria:

You are VAT-registered with the UAE Federal Tax Authority (FTA).

The goods or services purchased are for business use and not for personal consumption.

Your business incurs VAT on taxable supplies or purchases that are necessary to produce goods or services sold.

How to Claim VAT Refund as a VAT-Registered
Business in the UAE

Step 1

Ensure VAT Registration

Before you can claim any VAT refunds, your business must be officially registered with the UAE Federal Tax Authority (FTA). If your annual turnover exceeds the mandatory VAT registration threshold (currently AED 375,000), you must register for VAT with the FTA.
Step 2

Track Your VAT-Inclusive

Purchases: You can only claim a refund on VAT paid for goods and services that are used in your business activities. Ensure that you keep accurate records of all your VAT invoices and receipts for business purchases.
Step 3

File Your VAT Returns

VAT-registered businesses are required to file VAT returns on a quarterly or monthly basis, depending on your business's size and VAT registration type. In these returns, you’ll report:
Output VAT: VAT you have charged on sales.
Input VAT: VAT you’ve paid on purchases related to business activities.
The difference between your output VAT and input VAT will determine whether you owe VAT to the government or are eligible for a refund.
Step 4

Submit Your VAT Refund Request

If the VAT paid on your purchases (input VAT) exceeds the VAT collected on your sales (output VAT), you can request a refund. This is done through your VAT return by selecting the appropriate option for refund processing.

Process Time: The FTA will process your claim and, if approved, issue the refund. The refund is typically paid through bank transfer to your registered business account. The FTA may take up to 20 business days to process VAT refund claims, depending on the volume and complexity of the claim.

What Purchases Are Eligible for VAT Refund?

To claim VAT back, the goods and services must be necessary for your business operations. Eligible expenses may include:

Office supplies

Computers, printers, stationery, and other office equipment.

Business-related services

Marketing, legal, and consultancy services.

Raw materials

and inventory required for manufacturing or production.

Business travel expenses

Hotels, transportation, and business meals.

Note: Items purchased for personal use or those that are not used for business purposes are not eligible for VAT refunds.

How to Ensure Compliance with
UAE VAT Regulations

To avoid issues with your VAT refund claims and ensure full compliance, it’s essential to:

Keep accurate records

Retain all VAT invoices, receipts, and financial statements.

Submit timely VAT returns

Meet all VAT filing deadlines to avoid penalties or issues with your refund claims.

Work with a VAT expert

Consider working with an experienced VAT consultant or accountant to help you manage your VAT obligations efficiently and avoid costly mistakes.

Why Partner with Us for VAT Refund Assistance?

Comprehensive Support

We offer end-to-end support for your VAT filings and refund claims.

Expert Advice

Our team provides expert insights on VAT regulations to ensure your business remains compliant.

Maximized Refunds

We help you ensure that your business claims the maximum VAT refund possible, based on your eligible expenses.

Common Questions About VAT Refund for
Businesses in the UAE

If you make an error on your VAT return or in your VAT refund claim, you must:

Amend the VAT return: Log into the FTA portal and correct the mistake by submitting an amended VAT return.

Notify the FTA: In some cases, you may need to inform the FTA if the refund has already been processed, and they may require repayment if the error led to an overpayment.

Yes, if your business imports goods or services into the UAE for use in business operations, you can claim VAT on the import VAT paid at the customs department. The VAT on imports will typically be recovered through your VAT return, just like VAT paid on domestic purchases.

If your VAT refund claim is rejected by the FTA, they will typically provide a reason. Common reasons for rejection include:

  • Missing or incorrect documentation.
  • Purchases not deemed eligible for VAT recovery.
  • Errors in the VAT return. You can appeal the decision by correcting the issue or submitting additional documentation to support your claim.
Contact with us

Get in Touch with Us Today

If your business is VAT-registered in the UAE and you need assistance with VAT returns or claiming a VAT refund, contact Finhub Advisory Middle East. Our experts are ready to provide tailored advice and services to ensure you claim your VAT refunds efficiently and in full compliance with UAE tax laws.

Mail

support@finhubmiddleeast.com

Phone

+971 50 516 9396

Visit office

Office 289, Mezzanine floor, Hamsah A building, Karama, Dubai, UAE

    Finhub Middle East