How to Claim VAT Refund in the UAE?

Have you come across terms like “Tax Free Dubai” and “VAT Refund Dubai” while visiting or working in the UAE and wondered what it means? Here we explains VAT and the VAT Refund process in the UAE, whether you are a tourist, a business or a resident.

What is VAT in UAE?

The United Arab Emirates implemented the Value Added Tax (VAT) system on 1 January 2018. VAT is an indirect tax that is levied at a rate of 5% on most goods and services in the UAE.  It is charged at each level of the supply chain and is eventually paid by the end consumer. 

Who are Eligible for VAT Refund in UAE? 

VAT Refund forms must be submitted on the Federal Tax Authority (FTA) website through the EmaraTax portal.

• Businesses: Businesses registered for VAT and filing VAT Return in UAE, are eligible for VAT Refund if the input tax or the VAT paid on business expenses is greater than the output tax or the VAT collected from sales during a specific period. They must submit form VAT311 to claim the VAT Refund.
• Foreign Businesses: Foreign Businesses can claim VAT Refunds by submitting a specific refund request form, i.e. VATGRB.
• Tourists: Tourists can claim VAT Refunds on certain purchases made during their visit to the UAE at designated airports or self-service kiosks before their departure.
• UAE nationals building new residences: VAT Refunds can be claimed by submitting a special form, i.e. VATGRH1.
• International Organizations, Foreign Governments, & Diplomatic Bodies. 

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VAT Refund UAE for Businesses | VAT311  

Businesses are legally required to charge VAT on the taxable goods or services that they provide to their consumers. Claiming a VAT refund begins with registering for VAT. A business must register for VAT if its taxable goods is greater the mandatory registration limit of AED 375,000. 

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Eligibility Criteria

Businesses are eligible for VAT refund if they:

• Are registered for VAT on the official Federal Tax Authority (FTA) portal.
• Diligently maintain authentic records of all VAT-paid transactions.
• Pay VAT on all business expenses.
• File VAT returns accurately without delay.

Also Read: Documents Required for VAT Registration UAE

Steps to Claim VAT Refund for Businesses

Step 1:  Register on the official FTA portal and create a Taxable Person to begin the VAT registration process. This is done to obtain a Tax Registration Number (TRN).

Step 2: Fill out the mandatory details in form VAT311.

Step 3: Download the VAT Refund Excel template from the official FTA portal and fill it with invoice details related to VAT Returns. Upload it with form VAT311.

Step 4: Accurate records of all taxable supplies and expenses, including invoices issued to customers and received from suppliers and other relevant receipts, must be maintained.

Step 5: The FTA may request further information to verify your claim.

Step 6: VAT Refunds are issued only if the input tax is greater than the output tax. The FTA will process the refund after reviewing the VAT returns.

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VAT Refund for Tourists in the UAE

Tourists can claim VAT refunds on certain taxable goods purchased in the UAE, excluding goods consumed fully or partially in the UAE & motor vehicles, boats, and aircrafts. Stores that participate in the VAT Refund scheme will provide tourists with a tax invoice that can be used to claim the refund allowing them to take full advantage of “Tax-free Dubai”. 85% of the Value Added Tax (VAT) paid is eligible for refund, subject to a deduction of AED 4.80 for each Tax-Free Tag. The Tax-Free tag and tax invoice must be preserved for validation before leaving the UAE.

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Eligibility Criteria

• Must be an overseas tourist aged 18 years or older.
• Mustn’t be a UAE resident.
• Goods must be shipped from the UAE within 90 days of their purchase.
• Total purchases made must be no less than AED 250 to qualify for a tax refund.

Stores participating in the Tourist Refund Scheme may issue one of the following types of tax invoices:

• A Handwritten Tax Invoice
• A Paper Tax Invoice with a Tax-Free Tag
• A Paper Tax Invoice with a Digital Tag
• A Digital Tax Invoice

Also Read: How to Find TRN Number and Perform TRN Verification in UAE? 

Steps to Claim VAT Refund as a Tourist

Step 1: Take goods to a validation point before checking in luggage (self-service kiosk or manned desk).

Step 2: Show your original travel document (passport or GCC ID). Tax invoices, tax-free tags, and the goods purchased may be subject to inspection at the border checkpoints.

Step 3: Select a refund method—credit/debit card, cash, or digital wallet. Cash refunds are limited to AED 35,000 per tourist; amounts exceeding this require a valid credit/debit card.

Step 4: Track the VAT Refund: Use the Planet Shopper Portal or the Planet Tax Free ME application to track VAT refund transactions. A link will be sent via SMS after the purchase to access these features.

Airport Locations: Abu Dhabi Airport – Common area between all terminals, Dubai Airport – Terminal 1 ,2 ,3, and 3 Business, Al Maktoum, Sharjah Airport, Al Ain Airport, Ras Al Khaimah Airport, and Al Fujairah Airport.

Land Borders: Al Ghuwaifat, Al Hili al Ain, Al Madeef Al Ain, Hatta, and Khatmat Malaha

Seaports: Port Zayed – Abu Dhabi, Port Rashid – Dubai, Port Khalid – Sharjah

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VAT Refund UAE for Business Visitors (VATGRB1)

Foreign businesses (Business Visitors) may be eligible to apply for a VAT Refund of tax paid under certain circumstances. AED 2000 is the minimum amount of VAT eligible for a VAT Refund UAE. 

Also Read: How to Register for Corporate Tax in UAE Using Emaratax 

Eligibility Criteria

Foreign businesses are eligible for a VAT Refund if:

• They don’t have a place of establishment or fixed establishment in the UAE.
• They aren’t a Taxable Person in the UAE.
• They are registered & legally recognized as a business in their home country.
• They aren’t conducting business activities regularly.

Steps to Claim VAT Refund for Foreign Businesses

Step 1: Register on the Federal Tax Authority (FTA) portal and create a Taxable Person Account.

Step 2: Go to the VAT section and select the ‘Business Visitor Refunds’ option.

Step 3: Fill in all mandatory fields and attach necessary documents such as:

• Original Tax Compliance Certificate
• Declaration of Exempt or Non-Business Activities
• Tax Invoices
• Copy of the Authorised Signatory’s Passport.
• Proof of Authority for the Authorised Signatory.

Step 4: Submit the Application: Review and submit the form. A confirmation email will be sent.

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VAT Refund for UAE Nationals Building New Residences (VATGRH1)

A UAE National is eligible for VAT Refund only for certain expenses on a newly developed residence for their family. Eligible expenses covered under the refund scheme include:

• Building materials & services from contractors.
• Specific items such as central air conditioning units, doors & windows, fire alarms & smoke detectors, flooring (excluding carpets), kitchen fixtures & plumbing materials, etc

Non-Eligible Expenses like non-affixed furniture (e.g., sofas, tables), electrical appliances (e.g., cookers, fridges), landscaping (e.g., trees, plants), swimming pools & garden ornaments, cannot be reclaimed.

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Eligibility Criteria

• Should be a UAE citizen
• Should hold a Family Book as proof of family status and nationality.
• VAT Refund Request must be submitted within 12 months from the final date of the new residence’s construction.

Steps to Claim VAT Refund for UAE Nationals

Step 1: Register on the Federal Tax Authority (FTA) portal and open a Taxable Person Account.
Step 2: Go to the Special Refunds section and select ‘New Residence VAT Refunds’ option.
Step 3: Fill in all mandatory fields and attach required    documents, such as:

• Emirates ID
• Family Book
• Property Completion Certificate and Building Permit
• Property site plan
• Proof of land ownership
• Bank letter with account details

Step 4: Confirm and submit the form. An email confirmation will be sent regarding the application status. 

Also Read: How to Get an Audit License in UAE

Why Hire VAT Consultants in UAE?

Audit firms in UAE play an essential role, assisting businesses with VAT compliance and refund processes.

• Audit firms stay updated on the latest VAT regulations and requirements, which is crucial for ensuring compliance and avoiding penalties.
• Audit firms ensure that VAT returns are filed accurately and on time, saving time and reducing hassle. They can easily identify potential deductions and refunds.
• Audit firms identify and claim all eligible VAT refunds. This is particularly beneficial for businesses with significant expenses.

Also Read: Corporate Tax UAE: Everything You Need to Know in 2024

Choosing VAT Consultants in UAE

Consider the following key points:

• Experience: Consult with audit firms experienced in VAT compliance and refunds.
• Reputation: Consult with audit firms that have a good track record and client testimonials.
• Services: Consult with audit firms that offer comprehensive VAT services.

Kreston Menon is a renowned VAT Consultant in UAE, providing VAT Consulting services to businesses and individuals with an impeccable experience of 31 years and trustworthy consultants. Kreston Menon provides VAT services in Dubai and across the UAE including VAT Refunds, VAT Advisory, VAT Compliance, VAT Audit and VAT Litigations to meet their clients every need.

A thorough understanding of VAT in the UAE, combined with meticulous records simplifies the process for filing a VAT Return in UAE. Claiming a VAT Refund in Dubai can be a smooth and stress-free experience with the right support and knowledge. Stay updated on the latest regulations and seek professional assistance if needed.