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Expo 2020 and its Tax Impact. (VAT Refund)

Expo 2020 will be held in Dubai, UAE from October 20th to April 2021.

The Article below will clear all your doubts or questions regarding the Tax impact of Expo 2020.

On the 16th of Jan 2019, Sheikh Mohammed Bin Rashid Al Maktoum, issued Cabinet Decision No. (1) of 2019, on VAT refund over the tax paid the goods and services which are in connection to Expo 2020. According to Cabinet Decision No. 1 of 2019 Official Participants of Expo 2020 will be able to claim a refund of VAT acquired by them on the import or supply of certain goods and services.

The governing authority for VAT in UAE, which is the Federal Tax Authority, announced relaxations to the official participants of Expo 2020 with regards to VAT. Before Proceeding to essential areas of VAT refund, it is necessary to provide clearance about some definitions so that official participants will be able to understand the VAT refund process and the kind of refund eligible for them.

The official participants of Expo 2020:

Countries and intergovernmental organizations which have received and accepted the official invitation from the State to participate in the Expo 2020 Dubai engaged in a non-commercial capacity as an exhibitor. To date, around 190 nations from across the world have confirmed their participation.

Bureau Expo 2020 Dubai?

The Bureau Expo 2020 Dubai established by virtue of Decree No 30 of 2014 issued by the Ruler of Dubai shall be the governing body for the refund scheme.

How will the official participants be affected and how does the VAT refund process work for them?

Official Participants of Expo 2020 will be subject to UAE VAT provisions as they will be considered as mainland business and will be incurring VAT on Goods and Services connected to Expo 2020 as per normal UAE VAT rules.

The general UAE Tax rules will not allow the official Participants to refund the VAT paid which are related to expo 2020 unless they are registered for VAT in UAE but cabinet 1 of 2019 in certain situations provides a Tax relaxation for the official participants so Official Participants are eligible to recover VAT on certain Goods and Services which were imported or acquired.

One of the following methods can be used to claim the VAT incurred:

  • If the Official Participant is registered for VAT, it may reclaim VAT via its UAE VAT return.
  • If the Official Participant is not registered for UAE VAT, the refund applications can be made through the Bureau by submitting a special refund application to the Bureau.

Note: the Official Participant should be registered for VAT if the value of their taxable supplies or imports (for commercial or non-official purposes) in the UAE exceeds, or is anticipated to exceed, the mandatory registration threshold of AED 375,000.

Official participants can claim VAT on the following:

Typically, a person may only recover VAT incurred in the UAE on Goods and Services, where the Goods and Services are used or intended to be used for making taxable supplies. Where incurred expenses do not relate to any taxable supplies made by the person, VAT is not recoverable.

Participants are entitled to reclaim VAT paid on the import and acquisition of the following Five Categories of Goods and Services without having to use them for taxable supplies:

  • VAT incurred by the Official Participant on Goods and Services in direct connection with the construction, installation, alteration, decoration, and dismantlement of their exhibition space;
  • VAT incurred by the Official Participant on Goods and Services in direct connection with the operation of their exhibition space and any presentation within the Expo 2020 site;
  • VAT incurred by the Official Participant on Goods and Services relating to the actual operation of the office of the Official Participant provided that the value of each Good or Service for which a claim is made is not less than AED 200.
  • VAT incurred on import of goods for the personal use of the Official Participant’s Section Commissioner-General, Section Staff, and the Beneficiaries
  • VAT incurred on import of goods for the personal use of the official participant’s section commissioner-general, selection staff, and the beneficiaries.

Note: To be eligible to reclaim VAT on expenses under categories 1 and/or 2, the Official Participant must be in possession of a Certificate of Refund Entitlement issued by the Bureau.

IMPORTANT NOTE: An Official Participant who has been granted a refund in respect of any import of Goods cannot sell them for Consideration or transfer them free of charge without the prior consent of the FTA and the Bureau, and without payment of the Tax.

Additionally, to the above categories of expenses, where an Official Participant is registered for VAT in the UAE, it may also be entitled to recover VAT on other types of expenses under the general VAT rules for recovering input tax – for example, expenses related to making taxable supplies.

It is important to note that Official Participants may use the special TRN (Tax Registration Number) assigned to the Bureau when the goods fall under Categories 1 and 2, and they hold a Certificate of Refund Entitlement. By using the special TRN, no import VAT will be imposed on the goods, and such goods should not be included in any refund application.

About the Certificate of Refund Entitlement?

To reclaim VAT on Goods and Services under categories 1 and 2 an Official Participant (both registered and non-registered for VAT) must obtain a Certificate of Refund Entitlement. To be eligible for special refunds regarding Goods and Services under categories 1 and 2, the Official Participant will receive a certificate reference number.

Eligibility Criteria for the Certificate of Refund Entitlement

To be eligible to apply for the Certificate:

– The applicant must be an Official Participant of the Expo 2020 in Dubai, holding a valid Expo 2020 trade license number.

– Not more than 20% of the exhibition space or presentation is, has been, or is intended to be used for non-official or commercial purposes.

By not obtaining the Certificate of Refund Entitlement (for example, if more than 20% of the exhibition space is going to be used for non-official or commercial purposes), the official participant is not entitled to claim the full amount of VAT on goods and services under Categories 1 and 2. As a result, the Official Participant may need to consider whether any VAT related to such Goods and Services can be reclaimed under the general VAT rules applicable to VAT-registered persons.

How Can ITC Accounting & Tax Consultancy support you?

As an accredited Tax Agency with FTA, our qualified registered Tax consultants will ensure VAT compliance while participating in the 2020 Expo are fulfilled.

We will support you with respect to the following:

  • Applications for UAE ID and trade license for Expo Dubai 2020.
  • VAT Registration with the (FTA) Federal Tax Authority.
  • Filing the periodic VAT return and refund application.
  • Compliance in filing the Certificate of refund entitlement.
  • Regular communication and follow-up with the Bureau and/or FTA on your behalf.
  • VAT De-registration for after completion of 2020 Expo.
  • If you want to continue operating your company in UAE after Expo, we can support you to attain a new TRN and register your company for VAT.
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