When the input VAT on your tax return exceeds the output VAT, you will be able to request a refund as a taxpayer. Input VAT is a tax on goods and services purchased by a business or taxable person in the UAE. The output VAT, on the other hand, is a tax collected on things sold by enterprises or taxable individuals in the UAE.

Eligibility to obtain VAT Refunds.

Since the introduction of VAT in the UAE, eligibility for VAT refunds are as follows:

• A taxable person or business entity that has paid an excess amount for VAT.
• Tourists or foreign businesses visiting the UAE.
• Foreign governments, military bodies, institutions, international organizations, and the like have incurred VAT for any item that is supplied in UAE.

Tax Refunds for Businesses in UAE.

A VAT-registered business must claim for a VAT refund within a calendar year after the end of the calendar year in which qualifying conditions occurred. Taxable individuals in the UAE can seek tax refunds, particularly if any of the following conditions apply:

• When a taxable person’s or business’s tax payment exceeds the net amount of tax payable.
• When there is an excess in deductible net VAT per VAT return – excess VAT may be carried forward to the following taxation period.
• When a taxable person has sent a qualified application for VAT deregistration.

The FTA will adjust the taxable person’s or business’s VAT refund against the VAT liability amount. Officials at the UAE FTA will react to applications for VAT refunds within sixty days of the date a taxable entity submits a request. Take note: necessary documents such as receipts and invoices, must be provided. Incomplete or erroneous information provided to the tax authority may result in the rejection of a VAT refund application in the UAE.